** Shares of Indian fintech firm Paytm rise 4% to 775.95 rupees

** Stk set for second straight sessions of gains, if trend holds

** Citi upgrades PAYT to "buy" from "sell" and doubles PT to 900 rupees

** Morgan Stanley keeps rating unchanged at "equal-weight" while raising PT by 32% to 660 rupees

** Both say regulatory risks ease after payments authority's approval to onboard new UPI customers; Citi expects monthly transacting users to bottom out in Q3

** Key growth drivers will be pick-up in new customers and merchants and speeding of merchant loan disbursals post launch of default loss guarantee model - Citi

** Six out of 14 analysts covering PAYT raised PT after the regulatory approval; avg rating at "hold" while median PT is at 550 rupees

** Stock up ~22% YTD

(Reporting by Dimpal Gulwani in Bengaluru)

((dimpal.gulwani@thomsonreuters.com))