Category: Your Money

Analysis: RCOM

Today’s pick is RCOM [stockquote]RCOM[/stockquote]. The stock started saw a rush to Rs. 110 levels in the starting of the year, but could not sustain the level, and started its downtrend to reach Rs. 50 by September. Since then the stock has been in an uptrend. In the last three months, the stock has moved +27% vs. +4% of the Nifty’s.

RCOM technical analysis chart

Oscillator RSI and CMO are closing in towards the over-sold territory. The stock is trading close to the lower end of Bollinger band giving an upward bias. Short-term technical just saw 18×9 bearish cross-over.

The MACD line and the signal line are moving parallel to each other and suggest the short –term downtrend to continue. Also, Long-term GMMA lines are starting to converge given the range-bound movement of the stock.

RCOM correlation chart

RCOM’s average correlation with the Nifty is 0.62 which is positive and strong. The scrip will be replicating movement of Nifty closely. [stockquote]NIFTYBEES[/stockquote]

RCOM volatility chart

RCOM has a historical volatility in the range of 0.4 to 1.0. The scrip’s volatility is currently in the middle of the range.

Given these technicals and divergences we suggest a short-term sell. For the long-term, we could take a call given the stocks ability to stick to the trend-line in place. However trailing stop-losses will be of help in case sudden trend-reversal were to take place.

Read what experts have to say about the Indian telecom sector here.

 

Live Portfolio: trades for Feb/7

When markets don’t help you, you need to help yourself. In the last three days, the technical trades were not able to do a very good job. And I also learned that having 3 stocks in portfolio, still is concentrated. Hence I tapped on the opportunity created today in the markets, to expand the portfolio into a couple of more stocks with bullish technicals.

I cut back my holdings on UCOBANK [stockquote]UCOBANK[/stockquote]to half, and CAIRN [stockquote]CAIRN[/stockquote] to three quarters to take new positions in SAIL [stockquote]SAIL[/stockquote] and PETRONET[stockquote]PETRONET[/stockquote]. Here is why..

It is clearly visible for SAIL that the oscillators are nearing the over-sold levels, and hence an opportunity is being created for the stock to start its up-move. The stagnating MACD lines are in confirmation as well.

SAIL technical Analysis Chart

Again, for PETRONET, the oscillators are much below their historical reversal levels, suggesting of an up move possibility.

PETRONET technical analysis chart

Although, partial closing of positions did take the poheatmaprtfolio a bit down, but I am sure that in the longer turn of events putting eggs in different baskets is going to help.

Here’s how the performance and portfolio looks like currently.

Portfoliotrades

 

 

 

 

 

 

 

 

Cheers!!

Analysis: IDEA

Today’s next pick is IDEA [stockquote]IDEA[/stockquote]. The stock saw a range bound movement till April. After a downward break out of the range, the stock moved to Rs. 75 levels to find support till September. Since then the stock is in an uptrend, and it saw a 52 week high of Rs. 123 in mid-January. In the last three months, the stock has moved +20% vs. +4% of the Nifty’s.

IDEA technical analysis chart

Oscillator RSI and CMO are in no-man’s land. The stock is trading close to the lower end of Bollinger band giving an upward bias.

The MACD line and the signal line are moving parallel to each other and suggest the short –term downtrend to continue. Although, Long-term GMMA lines are well spread out, and hence are giving a bullish sign for the long-term.

IDEA correlation chart

IDEA’s average correlation with the Nifty is 0.41 which is positive. The scrip will be replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

IDEA volatility chart

IDEA has a historical volatility in the range of 0.4 to 0.8. The scrip’s volatility is currently in the middle of the range.

Given these technicals, we suggest a short-term sell. For the long-term, we suggest a buy. However trailing stop-losses will be of help in case sudden trend-reversal were to take place.

Read what experts have to say about the Indian telecom sector here.

Analysis: BHARTIARTL

Today’s pick is BHARTIARTL [stockquote]BHARTIARTL[/stockquote]. The stock started the year with a down-trend, that lasted until September, where it got support at Rs. 250 levels. Since then it has been on an uptrend and it saw a 52 week high of Rs. 370 in mid-January. In the last three months, the stock has moved +20% vs. +4% of the Nifty’s.

BHARTIARTL technical analyis chart

Oscillator RSI and CMO are nearing the over-sold territory. The stock is trading close to the lower end of Bollinger band giving an upward bias. Short-term technical just saw a 18×9 bearish cross-over.

The MACD line and the signal line are moving away from each other and suggest the short –term downtrend to continue. Also, both long-term and short-term GMMA lines are very close to each other not giving any long-term direction to the stock.

BHARTIARTL correlation chart

BHARTIARTL’s average correlation with the Nifty is 0.49 which is positive. The scrip will be replicating movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

BHARTIARTL volatility chart

BHARTIARTL has a historical volatility in the range of 0.4 to 0.7. The scrip’s volatility is currently in the middle of the range.

Given these technicals, we suggest a short-term sell. For the long-term, we will have to wait and watch how the GMMA lines unravel themselves and a bullish call can be made if it holds the current trendline. However, we suggest having trailing stop-losses in case sudden trend-reversal were to take place.

Read what experts have to say about the Indian telecom sector here.

Indian Telecom: Hope at last?

The telecom sector is finally beginning to turn the corner after a difficult two years that was marked by weak operational performance, record low tariffs due to intense competition and regulatory hurdles.

Late last month, India’s biggest mobile carrier Bharti Airtel and Idea Cellular Ltd slashed discounts and freebies on offer to customers, effectively raising calling costs for mobile users. Vodafone India, the second biggest operator, has also hinted at raising tariffs.

SUBSCRIBER ADDITIONS

Earlier in September, RCom had raised tariffs by 25% for both post-paid and pre-paid customers. Since these top four operators account for nearly half of mobile phone users in the country, more than 400 million subscribers will have to shell out more by way of mobile bills.

With the exit of players like Etisalat, Swan Telecom and Videocon, consolidation has already begun giving room for large operators to hike tariffs. The tariff hikes will come as a huge relief for the industry struggling with increasing regulatory costs and weak pricing power.

To improve their operational efficiency, many telcos have deactivated inactive subscribers and instead turned focus towards retaining active users rather than aggressively acquiring new ones. The move reflects an operational shift from volume/subscriber growth to increased focus on pricing/margin front.

On the regulatory front, liabilities with regards to one-time spectrum fee and spectrum re-farming are now clear although the exact payout is yet to be determined. News agency PTI has estimated that the government may get around Rs 23,177 crore by way of one-time spectrum fee from operators.

SPECTRUM PAYOUTS IMPACT

Spectrum re-farming would mean another blow for incumbent operators as re-allotment of spectrum in a higher frequency band will lead to higher capital investment to maintain current service levels.

If 2012 was a year of regulatory uncertainty, 2013 will be a year of a string of litigation as telcos are likely to contest several decisions like abolition of roaming charges, invalidity of 3G roaming agreements and spectrum re-farming.

The three leading operators and the government are fighting it out in the courts on offering 3G services in areas where they do not hold 3G spectrum. Even the reduction of up to 50% in the reserve price of spectrum in the 800 megahertz (MHz) band, used by CDMA operators, has irked GSM operators.

Removal of roaming charges, if implemented, will hit telcos further as earnings from roaming and STD charges will vanish. Coupled with higher re-farming costs of spectrum, tariffs will only rise further from the current levels despite TRAI’s warning that it may intervene in pricing by fixing a cap.

DATA REVENUE

But the biggest turnaround will come once data revenues start picking up as earnings from voice services have stagnated. Future growth will revolve around data services through 3G and broadband wireless services. While currently, high pricing and higher cost of handsets are a major deterrent, accessibility will improve going forward and that would drive average revenues per user.

In short, it all depends on how telcos navigate regulatory headwinds and avoid a race to the bottom on the pricing front. Exciting times ahead!

[stockquote]BHARTIARTL[/stockquote] [stockquote]RCOM[/stockquote] [stockquote]IDEA[/stockquote]