Paytm registers a triangle breakout; has it finally risen from its ruins?

The stock of One97 Communications, also known as Paytm, has soared over 3.50% during the early hours of Thursday’s trading session.

Shares of Paytm registered a triangle pattern breakout and have recorded good volumes. The listing of then India's largest IPO was not that fascinating, as it has plunged over 75% since then, eroding a larger portion of investors’ wealth. The valuation of the stock has corrected to a greater extent, and interestingly, some strong buying has been seen at lower levels. On the technical chart, the stock is above its 20-DMA, 50-DMA and 100-DMA. On the weekly technical chart, the stock has crossed above the pivot of the double bottom pattern, which is a bullish sign. Of course, it must regain a lot of points to gain investors’ confidence, but the picture looks bullish as of now.

The 14-period daily RSI (65.95) is in the bullish territory and above its prior swing high. The OBV is at its peak which indicates rising volumetric strength in the stock. The +DMI is above the -DMI which shows a positive trend in the stock. The Elder Impulse system has charted bullish bars, while KST and TSI indicators show improvement in the stock’s strength. Overall, the stock is showing signs of bullishness in the upcoming days.

Such a bullish move by the stock is primarily caused by robust business performance in the first quarter of FY2022-23. The total number of loans disbursed grew nearly 500%t YoY, while its Consumer engagement is highest on the Paytm Super App. As per the price structure, we can expect the stock to test the level of Rs 850, which is its 23.8% retracement level of the prior downtrend. This shall act as strong resistance, but a move above this can induce positivity and the stock can claim Rs 950 level. However, a fall below the 20-DMA level of Rs 675 can be detrimental.