Merrill raises Bharti Airtel, Idea to 'buy'

An auction of 2G airwaves attracted less demand than targeted by the govt

Bank of America-Merrill Lynch upgraded Bharti Airtel and Idea Cellular to 'buy' from 'neutral' citing the positive outcome of the 2G auction this week.

BoA-Merrill said the "deep" under-performance in both stocks over the past 12 months, potential for more favourable policy decisions in areas such as spectrum pricing, and prospect of "strong" fiscal 2014-15 earnings growth would drive Bharti and Idea.

An auction of 2G airwaves attracted less demand than targeted by the government, leading to lower prices that are giving a respite to the debt-ridden industry.

Bharti gains 3.5%, heading towards its fourth day of gains. Idea is up 1.5%, gaining for a second day.