Paytm Shares Rise 4% Following Circuit Filter Revision and Potential F&O Inclusion

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Paytm Shares Surge Over 4% Amid Circuit Filter Revision and F&O Segment Speculations

Team FS

10/Jun/2024

Key Points:

Paytm shares rise over 4% following NSE's circuit filter revision from 5% to 10%.
Potential inclusion in the futures and options (F&O) segment sparks investor interest.
Paytm sees early signs of recovery with significant growth in UPI transactions.

Shares of Paytm parent One 97 Communications continued their upward trajectory, rising over 4 percent on June 10. This follows a significant 14 percent rally over the past two sessions, driven by a revision in the circuit filter and increased investor interest.

Circuit Filter Revision:

Recently, the National Stock Exchange (NSE) revised the circuit filter for Paytm's stock, increasing it from 5 percent to 10 percent. This change has generated renewed interest among investors, contributing to the stock's recent gains. Circuit filters are mechanisms used by stock exchanges to limit the price volatility of a stock during trading hours. By expanding the circuit filter, NSE has allowed for greater price movement, which can attract more trading activity and investor interest.

Potential F&O Inclusion:

Adding to the positive sentiment, Paytm is among several stocks that could be included in the futures and options (F&O) segment if proposed revisions in the eligibility criteria are adopted. Nuvama Institutional Equities highlighted this possibility in a recent note, suggesting that Paytm could enter the F&O segment if it meets the new criteria proposed by the Securities and Exchange Board of India (SEBI).

SEBI has issued a consultation paper seeking comments from stakeholders on updating the eligibility criteria for stock derivatives in light of market growth. The current criteria were last reviewed in 2018. SEBI's consultation paper invites public comments until June 19, 2024, after which it will review and potentially implement the changes. If Paytm meets the proposed criteria, it could be included in the F&O segment, although the final decision rests with SEBI.

Stock Performance:

At 10:32 am on June 10, Paytm shares were trading 3.6 percent higher at Rs 395.35 apiece on the NSE. Despite the recent gains, the stock has faced a challenging year, plunging around 39 percent year-to-date, underperforming the benchmark Nifty 50 index, which has risen 7.6 percent during the same period. Over the past year, Paytm shares have declined by 51 percent.

UPI Business Recovery:

Amidst the market fluctuations, Paytm has reported early signs of recovery and strong stabilization in its Unified Payments Interface (UPI) business. The total value of UPI transactions processed on the Paytm platform grew to Rs 1.24 lakh crore in May, up from Rs 1.22 lakh crore in April. This growth is attributed to the company's initiatives, such as introducing credit card payments on UPI and promoting UPI Lite.

In May, Paytm's total transactions stabilized at 114 crore, making it the third largest player in terms of market share as a Third-Party Application Provider (TPAP) since March. The company's positive outlook on UPI is further reinforced by partnerships with major banks and financial institutions, including Axis Bank, HDFC Bank, State Bank of India (SBI), and YES Bank, to enhance its UPI services.

Future Prospects:

The potential inclusion of Paytm in the F&O segment, along with the company's strategic initiatives to boost its UPI business, paints a promising picture for its future. The revision of the circuit filter by NSE and the ongoing discussions about updating the eligibility criteria for stock derivatives could significantly impact Paytm's stock performance and market perception.

Conclusion:

Paytm's recent stock performance reflects a blend of market-driven factors and strategic business developments. The circuit filter revision by NSE has played a pivotal role in attracting investor interest, while the potential inclusion in the F&O segment could further enhance its market presence. Additionally, the company's proactive measures to strengthen its UPI business and form partnerships with leading banks underscore its commitment to innovation and growth.

As SEBI reviews public comments on the proposed eligibility criteria for stock derivatives, market participants eagerly await the potential changes that could shape the future of Paytm and other stocks in the F&O segment. Meanwhile, Paytm's focus on enhancing its UPI services and expanding its market reach continues to drive its recovery and growth in the highly competitive digital payments landscape.

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Paytm Shares Surge Over 4% Amid Circuit Filter Revision and F&O Segment Speculations

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