Vodafone Idea, Bharti Airtel shares rally up to 6% ahead of Cabinet meeting
Vodafone Idea traded 5.68% higher at Rs 8.75 on the BSE at around 9.33 am (IST), while Bharti Airtel was up 1.37% higher at Rs 679.90.
Shares of telecom firms have been buzzing on Dalal Street ahead of the Cabinet meeting later in the day. There are hopes that the Union Cabinet is likely to discuss a relief package for the financially stressed telecom sector on September 8. Vodafone Idea traded 5.68% higher at Rs 8.75 on the BSE at around 9.33 am (IST) while Bharti Airtel was up 1.37% higher at Rs 679.90 at around the same time. On the other hand, the benchmark BSE Sensex was down 27 points, or 0.05% at 58,252. Reliance Industries, who owns telecom player Reliance Jio, was down 0.15% at Rs 2,437.60.
Santosh Meena, head of research, Swastika Investmart, said that if there is an announcement related to that then it will be a positive trigger for the entire telecom sector as well for some of the banking stocks like IDFC First Bank, Indusind Bank, and SBI. Shares of State Bank of India were up 0.42% at Rs 430.75, while IndusInd Bank and IDFC First Bank traded 1.22% and 0.65% higher at Rs 1013.15 and 46.65, respectively.
Meena added that Vodafone Idea may witness big swings due to its high beta nature but the situation is still vulnerable for this counter as there is a good chance that this sector is heading towards duopoly therefore investors are advised to remain with the top two players.
The market watcher believes that the average revenue per user (Arpu) has bottomed out and is likely to continue its upside momentum therefore the outlook for this sector is bullish where Reliance and Bharti Airtel both are a good bet to play the growth of this sector.
Vodafone Idea have already rallied around 40% this week in anticipation of relief measures so there is a risk of profit booking post-announcement while sharp sell-off can be seen if there will be no relief measures.
“Technically, 200-DMA of Rs 9.5 will act as a critical hurdle for Vodafone Idea. Reliance and Bharti Airtel both have witnessed multimonth breakout therefore the bullish momentum is likely to continue in the coming days,” said Meena.