Technical analysts think that Paytm might struggle to breach its swing high from its recent rally.

What Happened: Paytm fell significantly in January after the Reserve Bank of India barred Paytm Payments Bank from accepting fresh deposits over regulatory oversights. From January 31, the stock had fallen almost 60% to 52 weeks low in May.

The stock after the fall has risen over 130%, staging a remarkable turnaround.

Technical Views: Even though technical analysts have been impressed by the stock’s recovery and see strength in the up move, they expect resistance to the stock at around ₹800 levels.

Rupak De, senior technical analyst, at LKP Securities said, “The stock has shown strength for quite some time now, with sentiment remaining upbeat as it continues to sustain above the important 20 daily moving average (DMA). However, the stock is approaching its previous swing high of 798, where it may encounter resistance once again. Support is visible at 687, and a drop below this level could signal further weakness.”

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Jigar Patel, senior manager, and technical research analyst at Anand Rathi Shares and Stock Brokers said, “This significant uptrend indicates a robust recovery. From a technical perspective, the Relative Strength Index (RSI) on the daily chart has consistently remained above the 50 level, a key indicator suggesting that the current trend is well-established and likely to continue. However, as we move forward, the 700 level is expected to provide strong support, while resistance is anticipated around the 775-800 range. This zone could potentially act as a barrier to the ongoing rally. Given these factors, it is advisable to secure profits at higher levels rather than entering new aggressive long positions, as the upward momentum may face challenges near the resistance zone.”

Price Action: Shares of Paytm fell 1.91% to ₹736.25 on Wednesday.

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