Telecom sector in focus: Charts suggest up to 25% upside for Airtel, TTML

Charts suggest that Bharti Airtel can rally to a new high of Rs 800; However, investors need to wait for a confirmed breakout if considering to buy shares of Vodafone Idea.

Shares of Bharti Airtel, Vodafone Idea, Mahanagar Telephone Nigam Limited (MTNL) and Tata Teleservices (Maharashtra) are in the limelight on Friday as the government has approved the much-awaited auction of airwaves capable of offering fifth-generation or 5G telecom services including ultra high-speed internet. The goverment has gave its nod to set up captive 5G networks by big tech firms.

The spectrum auction shall commence on July 26, 2022, with pre-bid conference scheduled on Monday, June 20. 

The telecom industry is expected to shell out around Rs 1-1.1 lakh crore on the 5G auction, despite telcos' reservations over high spectrum prices, Icra said on Wednesday but cautioned that sector debt level is likely to rise with upcoming auctions. READ MORE

In the current market turmoil, the BSE Telecom index has seen a steep fall of 20 per cent from its historic peak of 1,971 recorded merely two months ago in April 2022, while benchmarks, the BSE Sensex and Nifty have dropped around 16 per cent from their respective highs touched in October last year. 

Among the telecom pack, Tata Teleservices (Maharashtra) has been the biggest loser, the stock has plummeted 42 per cent, followed by MTNL down 36 per cent. Shares of Vodafone Idea shed 26 per cent, while Bharti Airtel slipped 16 per cent when compared with their respective highs in April.

Given the previaling bearish undertone in markets, here's how the telecom stocks look on technical charts:
 

BSE Telecom Index

Outlook: The current support levels may provide some relief 

The Telecom index is near its support of 1,389, which is its 100-weekly moving average (WMA). In addition, the breakout range of 1,500 to 1,450, witnessed in August 2021 may provide some relief and hope of revival for the index. The immediate hurdle for the index lies at 1,620 and thereafter at 1,700-mark, shows the weekly chart. CLICK HERE FOR THE CHART

Bharti Airtel Ltd (BHARTIARTL)

Likely target:  Rs 800

Upside potential:  23%

There is a clear breakout at Rs 600, which signals a medium-term rally towards Rs 800-mark, shows the monthly chart. The present price level is withstanding the sell-off and may even head to test the support of Rs 600. That’s said, any positive reversal or robust volume action could trigger a sharp reversal at the counter. At this juncture, the volume on weakness are lesser when compared with a positive. The broader outlook points at a new high of Rs 800 on any decent rebound.  CLICK HERE FOR THE CHART
 

Tata Teleservices (Maharashtra) Limited (TTML)

Likely target:  Rs 140 - 150

Upside potential:  16 - 25%

Soon after the phenomenal rally of 800 per cent from October 2021 to Jan 2022, the stock has corrected by a massive 70 per cent and now trades sideways indicating a consolidation phase. The stock seems to be holding support at the 50-WMA placed at Rs 110 now, and as long as this level is held, the stock can potentially show a reversal towards Rs 140 and Rs 150-levels. CLICK HERE FOR THE CHART

Mahanagar Telephone Nigam Ltd (MTNL)

Outlook: Hurdle set at Rs 23

MTNL currently trades 11 per cent higher from its next major support placed at Rs 17. For a breakout to emerge, the stock needs to overcome the selling hurdle of Rs 23 decisively, that is is its 50-WMA. Only upon that, the counter could see a possible upside move.  CLICK HERE FOR THE CHART

Vodafone Idea Ltd (IDEA)

Outlook: Wait for 200-WMA to get surpassed

Chartists always preferred to identify stocks on the verge of a breakout, and so means the case with Vodafone Idea. Though, the stock trades in a broad consolidation or sideways trend since May 2020, the price action has been unable to breakout firmly over its 200-WMA since 2016. The 200-DMA is presently positioned at Rs 11.30.

The stock did make one attempt to overturn the same average, but severely failed to do so in December 2021. Thus, for Vodafone Idea, it should be wise to wait for the stock to cross the 200-WMA, rather than getting trapped in the process. CLICK HERE FOR THE CHART