Budget 2024: Sensex, Nifty open Flat ahead of budget speech; Paytm crashes after RBI imposes strict curbs

Paytm's shares faced a significant setback today, plunging 20% to hit the lower circuit, following the Reserve Bank of India's (RBI) imposition of restrictions on Paytm Payment Bank. The stock opened at ₹608.80 on the Bombay Stock Exchange (BSE), experiencing the lower circuit within moments of the market's opening.

Amidst the development, broader market indices, Sensex, and Nifty exhibited a flat opening on February 1. At 9.22 am, the Sensex saw a marginal increase of 10 points, reaching 71,761, while the Nifty stood at 21,728, up by 2 points compared to the previous close.

The Finance Minister, Nirmala Sitharaman, is scheduled to present the interim budget for the fiscal year 2024-25, with the full budget expected in July after the Lok Sabha elections.

Following the RBI's strict stance on Paytm Payments Bank, several brokerages downgraded the stock. Jefferies, for instance, slashed its target price from ₹1,050 to ₹500 per share, citing reputational risks. Jefferies also downgraded Paytm to 'underperform.'

In response to the RBI's announcement, Paytm clarified that the restrictions would not impact user deposits in savings accounts, wallets, FASTags, and NCMC accounts. The company assured users that they could continue to use existing balances in these accounts. Paytm also mentioned that its merchant payments business could be sustained through partnerships with other banks, estimating a potential impact of Rs 300-500 crore on its annual EBITDA in the worst-case scenario.