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Telecom Stocks Outlook for the week – 02 to 06.01.2017

Telecom Stocks Outlook for the week – 02 to 06.01.2017



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Telecom Stocks Outlook for the week – 02 to 06.01.2017
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The shares of major telecommunication companies are likely to see a negative trend next week due to concern about intense competition hitting pricing power and margins. Traders are likely to view any rise in stock prices as an opportunity to sell. A slew of macroeconomic data, as well as Prime Minister Narendra Modi's speech on Saturday will also be in focus. Free data services by Reliance Industries Ltd's subsidiary Reliance Jio Infocomm, as part of its welcome offer, have led to concern among peers about erosion in market share and a fall in average revenue per user, both for data services and voice calls. Following Reliance Jio extending its free offer till Mar 31, most telecom operators have cut tariffs steeply. Competition in the telecom industry, triggered by the new entrant, continues to put pressure on the margins of operators such as Bharti Airtel and Idea Cellular. For Bharti Airtel, a fall in the company's average revenue per user in the September quarter has weighed on sentiment. Shares of Bharti Airtel may face resistance at 312 rupees and get support at 295 rupees, a Mumbai-based. Tata Communications, which has so far outperformed the sector, is in a consolidation mode, the analyst said. Resistance for the stock is expected at 650 rupees, while support is seen at 612 rupees. The Idea Cellular stock is seen facing resistance at 78 rupees and getting support at 70 rupees. In the past three months, the stock has fallen 7.1%, and lost nearly half its value this year. The Reliance Communications stock, which has been under pressure for some time, is seen continuing with the downtrend. It may get support at 31 rupees, while resistance level is expected at 36 rupees. The stock has also fallen almost 20% in the last three months, while more than half its value has been eroded in the past year.