Explained: The Reason Behind Paytm 9% Rise Instead of 5%
NSE has revised the circuit filter for Paytm stock to 10% from the previous 5%. Paytm shares were trading at Rs 379.55 per share. The new upper circuit limit is Rs 381.30.
Recent Surge in Paytm Shares
Shares of Paytm’s parent company, One97 Communications Ltd., surged by about 9.5% on Friday, June 7. This increase is notable as the usual upper circuit limit for Paytm shares has been adjusted from 5% to 10%.
Circuit Filter Revision
The National Stock Exchange (NSE) has revised the circuit filter for Paytm stock to 10% from the previous 5%. As of the latest trading session, Paytm shares were trading at Rs 379.55 per share. The stock opened at Rs 349, hit an intraday low of Rs 347.20, and reached an intraday high of Rs 381. The new upper circuit limit is Rs 381.30.
The revision in the price band took effect on June 7, 2024. This change comes after previous adjustments made by stock exchanges to manage the steep volatility caused by the Reserve Bank of India’s (RBI) restrictions on Paytm Payments Bank. Circuit limits are set by stock exchanges to prevent excessive price movements, ensuring the stock doesn’t fall below the lower limit or rise above the upper limit.
Historical Context
Paytm shares ended 2% higher at Rs 347.5 on Thursday. However, since January 31, 2024, the stock has lost 54% of its market value due to the RBI’s strict restrictions on Paytm Payments Bank.
Other Stocks with Revised Price Bands
Other stocks, including Bharat Dynamics, Aether Industries, Hindustan Zinc, and Cochin Shipyard, also saw their price bands revised by the exchange.
Decline in UPI Market Share
In another development, Paytm’s share of the unified payments interface (UPI) market in India has been declining for four consecutive months. Data from the National Payments Corporation of India shows that Paytm accounted for 8.1% of total UPI transactions in May, down from 13% in January 2024.
Financial Performance
Paytm’s financial performance in the March 2024 quarter showed a widening loss of Rs 550 crore, compared to Rs 169 crore in the same quarter last year. Revenue from operations fell by 3% year-on-year to Rs 2,267 crore, down from Rs 2,334 crore. The financial impact includes the effects of the RBI’s actions against Paytm Payments Bank.
Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.