Following the development, shares of Vodafone Idea slipped over 7 per cent on the BSE on Tuesday while the S&P BSE Telecom index traded over 1 per cent lower at 1,311.85 levels.
Here's a look at what technical indicators suggest for telecom stocks and how you should trade them -
BSE Telecom Index: A bearish divergence on Relative Strength Index (RSI) indicates that price is holding the momentum upward. Though the formation on the daily chart indicates consolidation, the index is attempting to cross 1,370 levels. On the downside, 1,260 – 1,270 range is emerging as buying reversal. The overall view remains as “wait and watch” with a bullish sentiment.
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Bharti Airtel Ltd (BHARTIARTL): This counter is waiting to breakout above Rs 600 levels. The day it closes above Rs 600, immediate levels could be Rs 635 and Rs 648. The support remains at Rs 550 on the closing basis. The RSI, which identifies strength has gone sideways resilient to breach 50 value, also indicates another support level. The trend remains optimistic till Moving Average Convergence Divergence (MACD) trades above the zero line.
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Vodafone Idea Ltd (IDEA): If this counter continues to trade below Rs 9 for a few more sessions, then it may eventually lose the steam it generated towards climbing Rs 12 levels. On price parameters, moving average of 50- day moving average (DMA), 100-DMA have made a positive crossover with 200-DMA. This suggests firm rally above Rs 12 levels. The MACD is on the verge of breaching the zero line downward. If that occurs then upside may see further weakness.
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Bharti Infratel Ltd (INFRATEL): The harmonic pattern indicates a breakdown and a negative sentiment, as according to the daily chart. To regain the upward momentum, this counter needs to close decisively above Rs 208 levels. The volumes have been stable but MACD indicates weakness as it violates the zero line downward. The support is at Rs 180 levels.
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