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Telecom sector momentum to continue with a strong growth outlook, Analysts

Just as Vodafone Idea Ltd. has set an offer price for its follow-on public offer, stocks in the telecom sector have been doing well, according to analysts. The S&P BSE Telecom closed up 4.27% and saw 10.93% growth in the last month. While Tejas Networks Ltd. was locked in the upper circuit, after strong fourth quarter earnings, Vodafone Idea shares also jumped 11.64%. Analysts expect the momentum to continue with a strong growth outlook.

“What we see is that the overall telecom space is buzzing with a lot of interest in the market for telecom stocks, be it Bharti Airtel, which is at an all-time high… Then, you have some of the equipment companies like Tejas, which are reporting strong numbers. I think the entire space will continue to gain momentum,” said Siddhartha Khemka, head of retail research, broking and distribution at Motilal Oswal Financial Services Ltd.

The space has been doing well in the past month, said Kunal Shah, senior technical and derivative analyst at LKP Securities Ltd.

Indus Towers Ltd. shares have seen a sharp rise, with continuous upper movement. However, it is a good time to book some profit, he said.

While Vodafone’s fundraise is positive, there are still some questions regarding the recovery, according to Khemka.

But with government intervention, the telecom company is likely to turn positive, said Dharmesh Kant, head of equity research at Cholamandalam Securities Ltd. The stock may see a more upward trend and even buying at the current level will work, he said.

Apart from the telecom sector, Tata Consumer Products Ltd. was also trading in the green and is a stock to watch, according to Kant. In the next two to three years, the company is looking at positive growth, he said.

Shah’s pick for the day included Aditya Birla Fashion and Retail Ltd. The stock has seen a strong breakout on technical charts, and the rally will continue. There is good action and an opportunity for investors, he said. NDTV Profit

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