Shares of One97 Communications, Paytm’s parent firm, recovered sharply for the second straight session after falling sharply for the first two days.

Paytm shares were trading nearly 16 per cent higher on the Bombay Stock Exchange (BSE) at above Rs 1,700 apiece at 12:50 pm. On the NSE, too, the shares of the leading digital payments firm rose nearly 16 per cent.

Following the sharp rise, Paytm’s market capitalisation has crossed Rs 1 lakh crore. The rise in Paytm’s share price has also reduced losses that investors faced after the stock fell for the first two sessions.

While the sharp rally will provide comfort to shareholders, shares of Paytm are still down substantially from its IPO offer price of Rs 2,080-2,150.

Explained: What Paytm’s stock market debut means for future IPOs

Analysts believe that the rebound in Paytm’s stock is due to lower levels of buying among investors as the stock fell sharply on Monday. Paytm’s shares could also be rising as the company will hold its first board meeting after the stock market listing on November 27. However, analysts are still not sure if the stock will be able to sustain the momentum.

SHARP REBOUND AFTER FLOP LISTING

Paytm’s shares have sharply rebounded after falling nearly 28 per cent on Thursday when it made a disastrous stock market debut. The shock opening wiped off Rs 38,000 crore worth of investors’ wealth on the first day. The stock again slumped on Monday, resulting in Paytm’s market capitalisation falling below Rs 1 lakh crore.

The company’s poor opening on the stock market did not come as a surprise to analysts who had raised concern about Paytm’s expensive valuation and profitability.

Whether the stock rises further will depend on what the company announces in its upcoming board meeting and whether it will be able to execute plans to boost revenue and profitability.