Telecom Stocks Outlook for the week (11 - 15.06.2012)

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Jun 9, 2012, 6:53:05 AM6/9/12
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RUPEE DESK- Telecom Stocks Outlook for the week (11 - 15.06.2012)

 

Telecom stocks are seen bearish next week due to the prevailing uncertainty on regulatory issues. The Empowered Group of Ministers met earlier this week to decide on the final set of recommendations on spectrum auction norms. The panel will meet again Jun 22 to finalise auction norms, which will also include the contentious issue of reserve price for the spectrum auction.


The regulator, in its recommendations dated Apr 23, had proposed a reserve price of 36.22 bln rupees per 1 MHz of spectrum in the 1800 MHz band at a pan-India level. The reserve prices for the auction of spectrum in various bandwidths including the 1800 Mhz band, have been opposed by the industry, which has termed them exorbitantly high and retrograde. Recommendation on re-farming of spectrum has also invited sharp criticism from the industry.


Investors have mostly built short positions in telecom stocks due to the current regulatory uncertainties. Resistance for Bharti Airtel is seen at 315 rupees and support at 280 rupees. Investors may go long on the stock with a target of 320 rupees. However, the stock is seen lucrative in the long term. "We believe Bharti's cash flow generation story is compelling and a great opportunity for investors with a long-term view to 'BUY' the stock.

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