Telecom Stocks Outlook for the week – 26 to 30.05.2014
(www.rupeedesk.in)
Telecom stocks are expected to trade in the green next week as the broad
market is seen scaling new highs with the National Stock Exchange's 50-stock Nifty
likely to surpass the 7500 mark. Yesterday, Nifty ended at a record closing level of
7367.10, up 90.70 points or 1.2% from Thursday.
With the equity market reaching new highs aided by inflows from foreign institutional
investors, the Indian rupee has also strengthened against the US dollar. So far in May, the
rupee has appreciated 3.06% against the dollar. Yesterday, the rupee ended at 58.52
against the dollar. The strengthening of the rupee will provide cushion to the balance
sheets of telecom companies, some of which have significant dollar debt exposure.
The telecom sector is likely to take a breather with appreciation of rupee as all the three
listed companies, especially Bharti and RCOM (Reliance Communications) have huge
foreign debt. As a result, a strong local currency may lead to lower interest and
installment outgo for this company. With this, we remain positive on the sector for near
to medium term.
