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% as it formed a low near the 520 level. 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 a few levels being respected from here on out.
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; 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 NIFTY 500 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 NIFTY 500 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 the 780 and 835 levels. Any close below 630 will negate this view.
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Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
www.EquityResearch.asia | www.ChartWizard.ae
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