Bharti Airtel: Trading
Buy Target: 360
Ø
Bharti
Airtel Limited, a part of Bharti Enterprises, provides telecommunications
services throughout India. The Company provides GSM Mobile Services,
broadband, fixed line telephone services, long distance services
(international & national) and enterprise services.
Ø
Owing
to regulatory uncertainties the stock price of Bharti Airtel has witnessed
sharp decline over the last few trading session. We feel that the major
concerns are overdone as of now.
Ø
Market
has failed to take cognizance of positives such as tariff hike and its impact
on revenue growth. Company has recently also inaugurated launch of Airtel 4G
services in Kolkata.
Ø
On
the Flip side the recent depreciation in INR to result in higher revenue
recognition from Africa operations. Accordingly, expect improvement in
profitability.
Ø
Looking
at derivatives activity, Stock has quite low Open Interest of 11 mln shares (52
wk low OI @ 8.4 mln shares), which is on the lower verge. Also stock has shed
OI by ~6% from the expiry with a price rise of 2.5% indicating short covering
in the counter. Looking at the options activity highest put open interest is at
300 strike which will act as major support for the counter. Further to this 20d
HV of stock is at 25% level where as ATM IV is at ~27% levels indicating stable
outlook for the stock.
Ø
From
derivatives perspective & technical analysis the stock has a good
short term support at Rs 300 levels.(see
the chart attached)
Ø On daily chart RSI oscillator is
also on rising mode that makes upside momentum reliable.
Ø There is a strong possibility it may
move up sharply. We suggest going LONG on Bharti With SL:300 with target of
360.
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