Shares of Paytm’s parent company, One97 Communications, rose nearly 5 per cent in early trade on Tuesday after declining for two consecutive sessions.

At 10 am, Paytm shares were trading on the Bombay Stock Exchange (BSE) at Rs 1425.15, up 4.77 per cent. On the National Stock Exchange (NSE), Paytm shares were trading 4.90 per cent higher at the same time.

While Paytm shares have gained in early trade, it remains to be seen if the stock can hold gains as the overall stock market remains volatile. Paytm is unlikely to see aggressive stock market activity due to the ongoing volatility.

Read | Paytm shares fall sharply. What should you do?

On Monday, Paytm shares fell as much as 17 per cent after facing criticism regarding the expensive valuation of its initial public offering. The stock recovered later in the day, but still ended over 12 per cent lower.

As a result, the market capitalisation of the firm has fallen below Rs 1 lakh crore and investors have incurred substantial losses on paper.

In fact, Paytm’s disastrous market debut last week wiped out investors’ wealth to the tune of Rs 38,000 crore. Paytm had ended its first trading session nearly 28 per cent lower, following criticism about its stock valuation.

Paytm had priced its shares at Rs 2,150 each a figure that is higher than most of its listed peers. Even after dipping sharply on the first day, analysts felt Paytm shares were still trading higher than most competitors. Analysts also raised questions over the company’s profitability and growth.

Explained: How Paytm’s weak stock market debut impacted investors

Foreign brokerage Macquarie came out with a strong research note on Paytm’s business and expensive valuation, among other things. The brokerage valued Paytm’s stock at Rs 1,200 after criticising its expensive valuation.

“Paytm has been a cash-burning machine, spinning off several business lines with no visibility of achieving profitability. Unless Paytm lends, it can’t make significant money by merely being a distributor,” the brokerage said.