Last Week's Telecomania

Over the last Indian telecom stocks were on a heady upward move throughout the last trading week. Frontline telecom stocks like Bharti & Idea notched up double digit gains. RCOM wasn't party to the party for reasons which I not cover in this post. (A good summary on RCOM is available here).

The latest move comes in the wake of analysts at Credit Suisse flagging off a bullish view on some stocks in the sector. The good folks at CS believe that with the decreasing competitive intensity in the sector, good times will be back soon. The analysts point out to the fact that some of the new operators who had been awarded 2G licenses 2 years back have been unable to commence operations, and are now desperately trying to bail out of the industry.

Tough times don't last. Tough companies do!!! Bharti, by virtue of its 125 million strong existing user base is well positioned to ride out the storm.

In an earlier post, I had mentioned that Bharti meets many of the criteria of Warren Buffett style long term buy-and-hold investing. This post is available here. The idea then was that if Buffett did come shopping to India, he might be very interested in looking at this stock. I still hold strongly to that view. I must point out here, that last week's price movement is not the main reason I am bullish on this stock. It is only a reinforcing factor, which tells me that given the publicity generated by Credit Suisse's recommendation, other foreign brokerages too may begin to put out Buy Calls on the stock, leading to a re-rating in the stock. As always, the trick is to buy when the analysts are at their most negative, and wait it out until they change their view.