Relief Rally in Bharti Airtel stock is unwarranted for as their is no improvement in the telecom macro parameters. Kotak covering Airtel said,
We reiterate our current negative outlook on Bharti and recommend using the recent stock outperformance to pare exposure. Better-than-expected December 2009 quarter earnings are likely spurred by higher STV bookings and higher minutes elasticity. However, sector fundamentals remain weak, pricing may yet to bottom out and the full impact of pricing competition will reflect only in the March 2010 quarter. REDUCE.
It is too early to take a call on the duration of irrational price competition or the extent of damage it causes to the industry structure. December quarter earnings may not reflect full impact of recent price cuts. Betting on consolidation being an absolute positive is just that, a bet. Odds are unfavorable as well, in our view
