Bharti Airtel: Trading Buy Target: 360

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.