Telecom company shares face scam heat

Companies named in India’s biggest telecommunications scam continued to tank on Friday.

The Anil Ambani group firm Reliance Communciations lost 3.57% to close at Rs148.40 and Unitech was down 4.56% to close at Rs67.95.

Shyam Telecom was down 3.64% to close at Rs62.25, while Videocon Industries fell 8.06% to Rs216.20.

The Supreme Court has asked the Prime Minister’s Office (PMO) to explain why it delayed action against former telecom minister Andimuthu Raja over alleged improprieties in the allocation of 2G spectrum, airwaves used by mobile phone companies to transmit calls.

The PMO had been asked to file an affidavit in the highest court on why action had not been taken for 16 months even after calls to prosecute the telecom minister who has since resigned.

The political controversy has apparently rattled investors while foreign institutional investors were net buyers.

The realty index was the worst hit of the day, down 3.84%. The metal and oil and gas indices were down 2.55% and 2.59%, respectively.

“Political issues on the domestic front along with global uncertainty seem to be weighing on the markets. Also there is some sort of profit booking happening after sharp rally witnessed in Indian markets from 5600 to 6300,” said Rajan Malik, head, private client group advisory at Anand Rathi Financial Services.

“The issue seems to be mainly on political front and market participants fearing an upheaval over the weekend led to sudden panic selling,” said Ambareesh Baliga, vice president at Karvy Stock Securities.
Meanwhile, investors could look to buy into select stories on dips, said analysts.

“Though 100-200 points fall cannot be ruled out, this seems to be a healthy correction and an opportunity to buy on declines. We continue to prefer domestic consumption theories like banking, capital goods, infrastructure and pharmaceuticals,” said Malik.

“Though correction would affect all sectors, one can look to invest in sectors like infrastructure which have not moved up much in the rally and where the visibility seems to be emerging as we approach the end of 5-year plan. Also select pharma and FMCG stocks appear reasonably valued,” said Baliga.