Stocks decline in early trade; Paytm shares hit record low

File picture of the Bombay Stock Exchange (BSE) in Mumbai
| Photo Credit: SHASHI ASHIWAL

Benchmark indices Sensex and Nifty fell in early trade on Tuesday as volatility persisted amid mixed trends in global markets.

The 30-share BSE Sensex opened on a positive note and climbed 116.42 points to 71,188.91 points. However, it soon took a U-turn and fell 129.92 points to 70,942.57 points.

Showing a similar trend, the broader Nifty rose 14.80 points to 21,630.85 points initially but lost ground and declined 63.25 points to 21,552.80 points.

In the Sensex pack, Tata Steel, JSW Steel, PoweGrid and Wipro were among the major losers while ICICI Bank, NTPC, ITC and Kotak Bank were trading in the green.

BSE smallcap index fell 1.65%, midcap index dropped 0.57% and largecap index slipped 0.12%.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said midcap and smallcap stocks are likely to see a sharp fall as many such scrips are excessively valued.

“Correction will give opportunities to buy fairly valued stocks in this segment like PSU banks,” he noted.

In Asia, Tokyo’s Nikkei 225 and China’s Shanghai Composite were trading in the positive territory while Hong Kong’s Hang Seng was in the red.

European markets ended Monday’s session in the green with CAC 40 of France and DAX of Germany rising 0.55% and 0.65% respectively.

On Monday, the US market ended on a mixed note.

Global oil benchmark Brent crude rose 0.09% to $82.07 a barrel on Tuesday.

On Monday, Sensex settled 523 points or 0.73% lower at 71,072.49 points while the Nifty closed 166.45 points or 0.76% down at 21,616.05 points.

Foreign Institutional Investors (FIIs) were net buyers on Monday as they bought equities worth ₹126.60 crore, according to exchange data.

Paytm shares plummet

Shares of payments firm Paytm dropped 8.5% to a record low of ₹386.25 on Tuesday after brokerage Macquarie downgraded the stock, citing the “serious risk of exodus of customers” following the Indian central bank’s action against its banking arm.

Moving customers from Paytm Payments Bank to other banks by the February 29 deadline set by the Reserve Bank of India is “an arduous task,” as it would require customers to submit Know Your Customer (KYC) details again, Macquarie added.

Lending partners are re-evaluating their relationship with Paytm, which could potentially lead to a decline in lending business revenue if partners scale down or terminate their collaboration with Paytm, the note said.

The Reserve Bank of India’s January 31 order directing a wind-down of Paytm’s banking arm has resulted in the stock plummeting more than 49% and has eroded nearly $2.9 billion of shareholder wealth.

The RBI will not review its recent regulatory action taken against Paytm Payments Bank, Governor Shaktikanta Das