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Telecom stocks are expected to trade with a bearish trend next week in line with the broad market and as investors are expect to continue booking profits in select stocks. Investors are expected to refrain from taking large bets in telecom stocks until more clarity emerges post the upcoming meeting of the Empowered Group of Ministers on spectrum, expected in next few weeks. The Telecom Commission has proposed about 25% hike from the Telecom Regulatory Authority of India recommended spectrum reserve price, a move opposed by the industry. The proposals of the commission have to be vetted by the ministerial panel.
Currently, the view on telecom stocks is neutral until come clarity emerges post the meeting of the ministerial panel. As of now, we think stocks are pricing the upside from recent/ potential RPM (revenue per minute) hikes but not the downside on regulatory overhangs. The sector should move beyond the ongoing fiasco about spectrum reserve prices and participate in the upcoming auction with discipline.
A well conducted auction (that prevents collusion) should yield the fair market price of spectrum irrespective of the starting reserve price. Bharti Airtel that is currently trading with a weak bias for the short-term is expected to see more downside in the coming week, with the stock expected to decline to about 330 rupees. Idea Cellular, which saw about of profit taking in the last few weeks is expected to gain in the coming week to about 175 rupees, but is expected to see another round of profit booking after making small gains.
Reliance Communications is expected to continue making "lower tops and lower bottoms" indicating that the downtrend for the stock continues. The stock is expected to trade in the narrow range. After making significant gains in the last few weeks, Tata Communications is expected to see some corrections, though the trend for the stock remains positive.
Telecom stocks are expected to trade with a bearish trend next week in line with the broad market and as investors are expect to continue booking profits in select stocks. Investors are expected to refrain from taking large bets in telecom stocks until more clarity emerges post the upcoming meeting of the Empowered Group of Ministers on spectrum, expected in next few weeks. The Telecom Commission has proposed about 25% hike from the Telecom Regulatory Authority of India recommended spectrum reserve price, a move opposed by the industry. The proposals of the commission have to be vetted by the ministerial panel.
Currently, the view on telecom stocks is neutral until come clarity emerges post the meeting of the ministerial panel. As of now, we think stocks are pricing the upside from recent/ potential RPM (revenue per minute) hikes but not the downside on regulatory overhangs. The sector should move beyond the ongoing fiasco about spectrum reserve prices and participate in the upcoming auction with discipline.
A well conducted auction (that prevents collusion) should yield the fair market price of spectrum irrespective of the starting reserve price. Bharti Airtel that is currently trading with a weak bias for the short-term is expected to see more downside in the coming week, with the stock expected to decline to about 330 rupees. Idea Cellular, which saw about of profit taking in the last few weeks is expected to gain in the coming week to about 175 rupees, but is expected to see another round of profit booking after making small gains.
Reliance Communications is expected to continue making "lower tops and lower bottoms" indicating that the downtrend for the stock continues. The stock is expected to trade in the narrow range. After making significant gains in the last few weeks, Tata Communications is expected to see some corrections, though the trend for the stock remains positive.
