Vodafone Idea (Vi) has become the most talked-about telecom operator in India for the last few weeks. The telco’s uncertain future has people debating about what its next move should be to ensure survival. Due to all this, Vi’s stock had seen a major blow last week and had fallen under Rs 5. But on Monday, in the early trading session, telco's stock is looking much better. As of the time of this writing, Vi’s share price is Rs 7.10, and it is the same price the stock opened on Monday. So effectively, there’s no gain, but more importantly, there’s no dip/loss in the stock price today.
What’s Causing the Gain?
When the telco’s promoters are not willing to infuse capital, it’s really surprising to see the stock price of the company go up. There can be multiple reasons why Vi’s share price has shot up. The first reason could be the tax law that was introduced last week.
Second could be the talks of a relief package coming for the telecom sector soon. Third could be short-term retail traders looking to gain the advantage of the fallen price. Vi’s not a bad operator per se.
The telco’s prepaid and postpaid offers are unmatched by any other telecom operator in the industry. But its debt and losses have made the investors a little jittery. Even the lenders led by the State Bank of India (SBI), who believe that Vi might not be able to clear its debt completely, have suggested to the Department of Telecommunications (DoT) to covert Vi’s debt into equity.
The stock of the company is above Rs 7, which is a good thing for the retail investors who were worried that all of their money would be wiped out. There’s no saying what will happen at the end of the day and whether the stock will be stable or not.