GOLDEN RULES FOR TRADING

Telecom Stocks Outlook for the week – 04 to 08.07.2016 (Correction seen after post-Brexit surge)

Telecom Stocks Outlook for the week – 04 to 08.07.2016
(Correction seen after post-Brexit surge)

The shares of telecommunication services companies are seen correcting next week after gaining in
the post-Brexit market. Telecom stocks can go for a consolidation or a near-term correction of
3-4%. Telecom shares this week gained 3.5-7.5% from their previous week's close, as investors
churned their portfolios, picking stakes in companies which have little or no exposure to Europe.
We are expecting the downward trend is seen on the charts in line with expectations for the broader
market. Sector heavyweight Bharti Airtel Ltd may fall to 355 rupees in the near-term, the analyst said.

Resistance for the stock is seen at 372 rupees. Bharti Group Chairman and Managing Director Sunil
Mittal, according to reports, has said he expects consolidation in Indian telecom sector over the next
two years that would leave up to four private players and one state-owned operator in the market.
Mittal is also reported to have said the telecom industry would face massive erosion of tariffs with the entry of Mukesh Ambani-promoted Reliance Jio Infocomm. With already lower average voice and data realisation in the country, Reliance Jio's entry is likely to erode margins for the incumbents.

Idea Cellular Ltd during its analysts' meet on Monday had reportedly said the market was large enough to accommodate the new entrant. The company said it would re-assess its strategy closer to the launch of 4G services by Reliance Jio.