The Paytm stock sank 6.40 per cent in early trading hours as investors reacted negatively to the Enforcement Directorate raids on its premises last Saturday. The stock recovered from these lows, but ended with losses of 2.60 per cent.

On Sunday, One97 Communications, the Paytm parent, denied any link with the merchants that are under the ED scanner in the Chinese loan app case. Paytm said none of the funds frozen by the agency belongs to it or any of its group firms.

“As a part of ongoing investigations the ED has sought information regarding some merchants to whom we provide payment processing solutions. We wish to clarify that these merchants are independent entities, and none of them are our group entities,” Paytm had said in the regulatory filing.

There was, however, a knee-jerk reaction to the development on Monday with the Paytm stock dropping to a low of 681.20 during intra-day trades. It came off these lows to end down Rs 18.95, or 2.60 percent, at Rs 708.60 on the BSE.

Around 2.54 lakh shares were transacted against the two-week average of 77,000. On the NSE, the scrip settled 2.50 per cent lower at Rs 709 after touching an intra-day low of Rs 681 — a fall of 6.35 per cent. The development compounds the problem for its investors who had put their money in Paytm’s IPO last year. At the current price, the Paytm share is trading at a discount of 67 per cent to the issue price of Rs 2150 per share.