Jio Financial Services shares crashed sharply on Tuesday after the company surged up around 14% on Monday.

What Happened: The company late on Monday dismissed the swirling rumours about its potential acquisition of the digital payments giant Paytm.

Media reports about the acquisition led to the stock surging massively on Monday. The company was prompted to issue a clarification after the exchanges sought an explanation regarding the news.

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The backdrop to these acquisition rumours is rooted in Paytm’s recent regulatory challenges. On January 31, the Reserve Bank of India (RBI) imposed a ban on Paytm Payments Bank from acquiring new customers and ordered the termination of certain accounts. This regulatory heat led to a significant drop in Paytm’s share price witnessing a 36% fall over two sessions.

Amidst these troubles, Paytm was reported to be in discussions to offload its wallet business, with Jio Financial Services and HDFC Bank being named as potential buyers.

Price Action: Jio’s share price was down 3.53% to trade at ₹278.90 shortly after markets opened on Tuesday. The stock crashed over 8% to hit an intraday low of ₹266.05.

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