Shares of One97 Communications, parent of Paytm, tanked over 7 percent after rising for three trading sessions back to back. Overall weakness in the broader market also weighed on Paytm's shares. Nifty50 and Sensex both fell close to 2 percent today.

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At 9:36 am, the stock was down over 3 percent at Rs 1,740.5 on the BSE, far-flung from the issue price of Rs 2,150. In this week, the stock has risen over 11 percent.

The digital payments platform Paytm's shares had listed on stock exchanges on November 18 at a discount of around nine percent compared with the issue price of its IPO, which saw a subscription of 1.9 times the shares on offer.

Paytm’s IPO had suffered due to sky-high valuations, several analysts have highlighted.

Macquarie that initiated coverage on Paytm's stock with 'underperform', said One97 Communications' business model lacks focus and direction.

One97 Communications is a cash guzzler and achieving scale with profitability is a big challenge, the foreign brokerage had cautioned.

Some market participants believe that the new age technology companies are the future and their shares are worth buying, but not at frothy valuations.

Earlier this week, ace investor Shankar Sharma said that tiny, loss-making companies with excessively high valuations will have to prove their mettle eventually, and added that new-age companies will have to bring in "a lot of hard work and a lot of cash burn" to be able to grow in size and scale.

Meanwhile, a news report said that several big investors added Paytm's stock to their stakes after shares plunged by as much as 41 percent.

BlackRock Inc. and Canada Pension Plan Investment Board were among so-called anchor investors in the IPO that bought more Paytm shares on Tuesday and Wednesday, the news report added.

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