BHARTIARTL (Bharti Airtel Ltd.) - Dialing The Downside - 12/27/2
Bharti Airtel Ltd's stock ( Ticker BHARTIARTL ) has been in sideways consolidation for roughly about 8 years from 2008 to 2016, with a broad range of 240 - 440/480. We have traded this range successfully with simple sideways trading strategy where you buy at the range support and sell near range top. But this time we are less inclined to get involved, at least for long-term full fledge play.
Reasons for change are,
- New player - Reliance Jio - is going to disrupt the Indian telecom market and will decimate even existing thin margins.
- Not necessary that Reliance Jio will be successful in making profit ( To understand why telecom companies can't be hugely profitable, please read our post on RCOM - Reliance Communication, where we have mentioned the reasons for not to invest in RCOM considering it as cheap play !) but unfair competition will hurt others until things get worse.
- Reliance Jio has deep pockets as well as blessings of government and that government support part makes it very dangerous competition for others. You can outsmart the business and win but against government, hardly anyone can win !
Yes folks, politics is very import part of stocks trading, especially now, when governments across the world are interfering more and more e.g. Checkout the defense and finance sector stocks after Donald Trump win in USA, Stock performance of Adani companies in India after Modi became PM etc.
- Besides, general investment climate is still shaky in India and broad market weakness will play it's part too.
So we are not constructive on IDEA and Bharti Airtel stocks until things change. First stop to evaluate the situation and make a decision will be near 200 support level for Bharti Airtel Ltd.
Reasons for change are,
- New player - Reliance Jio - is going to disrupt the Indian telecom market and will decimate even existing thin margins.
- Not necessary that Reliance Jio will be successful in making profit ( To understand why telecom companies can't be hugely profitable, please read our post on RCOM - Reliance Communication, where we have mentioned the reasons for not to invest in RCOM considering it as cheap play !) but unfair competition will hurt others until things get worse.
- Reliance Jio has deep pockets as well as blessings of government and that government support part makes it very dangerous competition for others. You can outsmart the business and win but against government, hardly anyone can win !
Yes folks, politics is very import part of stocks trading, especially now, when governments across the world are interfering more and more e.g. Checkout the defense and finance sector stocks after Donald Trump win in USA, Stock performance of Adani companies in India after Modi became PM etc.
- Besides, general investment climate is still shaky in India and broad market weakness will play it's part too.
So we are not constructive on IDEA and Bharti Airtel stocks until things change. First stop to evaluate the situation and make a decision will be near 200 support level for Bharti Airtel Ltd.
