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Informist, Friday, Apr. 4, 2024

MUMBAI – Most telecommunications stocks will likely trade in a narrow range next week. However, Bharti Airtel Ltd. could stand out as it appears strong both fundamentally and technically, analysts said. While the reciprocal tariffs announced by the US will not have much of an impact on large telecom service providers, it might negatively affect certain telecom equipment manufacturers which have exposure to the US.

The 26% tariff on Indian goods will increase manufacturing costs, disrupt supply chains, and create uncertainty for telecom gear makers, Moneycontrol reported. Since telecom infrastructure requires various complex components, many of which are exported by domestic companies, the tariffs will push operational expenses higher and reduce the competitiveness of domestic firms, the report said. India currently imposes a 10-20% basic customs duty and a 10% surcharge on imports of telecom products from the US, the report said.

Speaking on the week ahead, Jatin Gedia, a technical research analyst at Mirae Asset Sharekhan, said that telecom sector stocks are likely to remain largely unaffected by tariffs, as most derive the majority of their revenue from the domestic market. While shares of other telecom service providers may be range-bound, Bharti Airtel might see a breakout on the technical charts, Gedia said. The stock may move towards INR 1,787-1,800 next week, as per Gedia. The stock has gained 0.6% this week and ended Friday 0.2% lower at INR 1,743.45.

While the next week may be difficult, Gedia sees Vodafone Idea consolidating and rising to around INR 9. The stock ended Friday at INR 7.91. In the medium term, the stock may rise to INR 11.5, he said. The company, which has been engulfed in financial trouble for quite some time, found a new life after the Indian government decided to convert the outstanding spectrum auction dues worth INR 369.5 billion into equity shares. The government will get the stake at INR 10 per share.

The equity conversion is beneficial for the company as without it the company would have to pay nearly INR 400 billion per year to the government as repayment, The Indian Express reported. However, with the government converting some of that into equity, the company might get a runway for another two years, the report said. The government's additional ownership in the company might also give banks more confidence to lend to the company. The stock gained over 16% this week.

TOP HEADLINES

* SEBI exempts govt from making open offer in Vodafone Idea stake acquisition
* Tata Comm to repurchase 16.72-mln-euro shrs in arm from another subsidiary
* Perplexing that BSNL formed panel on tariff dispute with RJio, says CAG
* PRESS: CAG flags lapses in BSNL financials, telecom, IT mins' functioning
* Vodafone Idea to convert spectrum dues into equity shares for govt
* Tejas Networks gets INR 1.89 bln from govt under production-linked scheme
* IPO Alert: Pace Digitek files DRHP with SEBI for fresh issue of INR 9 bln
* Railtel bags INR 1.63 bln order from Ircon International

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Akash Mandal

Edited by Subhojit Sarkar

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