Bharti: Where is the floor?

Stronger players survive and always emerge stronger after any intense pricing war in any industry….Bharti Management

Well, that’s what Bharti loyal shareholders may hope for. But right now, everyone is jumping off the sinking ship; and Bharti shareholders are no exception.

Interestingly, I covered Bharti stock on October 11, when stock price was 343. Today, about 20 days later, the stock price is 292 and no one knows how much more price damage stock has to see. The big question - everyone is asking/ debating/ reflecting - Is Bharti now an attractive buy considering the price damage stock has already seen. Where is the floor for stock price? Let us re look at Bharti Chart.

Bharti Daily Chart

Source: ChartAlert [www.chartalert.com]

Stock just above very strong support level: Bharti was one steady stock during 2008-early 2009 decline. It never went below 270-275 during the entire bear market with one exception when stock sank to 240-250 levels for couple of days around Oct 24-27 2008. This was the time when Nifty slipped below 2500. Leaving out that couple of days - support for Bharti stands at 275.

Hence, the big thing to watch out for: Will Bharti stock find value buyers around 275-280? I have my doubts…..

Problem: The issue right now is not of Valuation but of ownership. Bharti was one of widely held stock in institutional portfolio but things have changed and now no one wants to hold it. The stock is getting liquidated across portfolios with no adequate demand on other side. In such instances, it is very difficult to hold any price.

I guess even if one assumes that stock has suffered the price pain - time pain has yet to come; and this stock will fall off the radar of many investors till Telecom industry revives and come back on profitable growth trajectory.

Right now - price of Bharti stock is of no significance. It belongs to - BUY ON HOPE and FORGET Category. The issue with Bharti stock is not of price but of faith that the company will come out stronger over period of time and benefit shareholders. Do you have that faith?

Remember, We do not trade stocks…we trade our beliefs about that stock