PAYTM.in (One97 Communications Ltd) has been one of the worst IPO performers in the Indian markets. After listing near Rs. 2100, the stock lost close to 74% while it formed a low near 520 levels. Presently, multiple technical pieces of evidence suggest that there may be an attempt at a classical trend reversal and the worst may be over for this stock subject to few levels being respected going ahead from here.
The first sign of a potential reversal came when the stock found double bottom support in the 520-525 zone as evident from the chart. After that, the following few weeks saw a formation of a bullish Ascending Triangle pattern taking shape. The most recent price action shows that the price has attempted a breakout with strong volumes and this may lead to confirmation of a trend reversal.
While the MACD stays above its signal line, the RSI has shown a breakout from a pattern resistance. The RS line against the broader NIFTY500 index has changed its trajectory; it is rising and above the 50-period MA.
The stock is also inside the leading quadrant of the RRG when benchmarked against the broader NIFTY500 index. This indicates that the stock may continue to relatively outperform the broader markets.
If the present pattern resolves on the expected lines, the stock may test 780, and 835 levels. Any close below 630 will negate this view.
This was first published by StockCharts.com
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
Disclosure pursuant to Clause 19 of SEBI (Research Analysts) Regulations 2014: Analyst, Family Members, or his Associates holds no financial interest below 1% or higher than 1% and has not received any compensation from the Companies discussed.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions, and needs of specific recipients. This may not be taken in substitution for the exercise of independent judgment by any recipient.
The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates, or any other reason. Past performance is not necessarily a guide to future performance. The usage of the Research Reports and other Services are governed as per the Terms of Service on https://equityresearch.asia/terms-of-use
The Research Analyst has not managed or co-managed the issues of any of the companies discussed and has not received any such remuneration from such activities from the companies discussed.
The Research Analyst has not received any remuneration from the Merchant Banking activities.
The Research Analyst has adopted an independent approach without any conflict from anyone. The Research Analyst has not received any compensation or other benefits from the companies mentioned in the report or third party in connection with the preparation of the research report.
Compensation of the Research Analysts is not based on any specific merchant banking, investment banking, or brokerage service transactions.
The Research Analyst is not engaged in a market-making activity for the companies mentioned in the report.
The Research Analyst submits that no material disciplinary action has been taken on him by any Regulatory Authority impacting Equity Research Analysis activities.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country, or other jurisdiction, where such distribution, publication, availability, or use would be contrary to law, regulation or which would subject the Research Analyst to any registration or licensing requirement within such jurisdiction.
