IT, Telecom Stocks Fall Amid FII Outflows, Jio IPO Concerns

The Nifty IT index concluded Monday at 28,349.60, marking a 0.79 per cent decline. Among the constituents, HCL Technologies gained 0.52 per cent and Persistent Systems rose 0.29 per cent, while Tech Mahindra dropped 2.85 per cent and TCS fell 1.44 per cent. The index is currently down 25.73 per cent this year, nearing its 52-week low. Telecom stocks also experienced a downturn, with Bharti Airtel down 1.44 per cent and Vodafone Idea 1.02 per cent since Thursday, even as the broader Nifty index increased by 0.59 per cent. Reliance Industries also saw a 1.62 per cent fall.

This market drop followed speculation regarding Jio Platforms' IPO price band, which emerged days after trillionaire Elon Musk's comments about Starlink's India launch. Nomura's latest report valued Jio's equity at ₹9.8–10.3 trillion. After applying a 20 per cent holding-company discount, Reliance’s 66.4 per cent stake would be worth ₹385–405 a share, which is approximately ₹136 less than Nomura’s previous valuation. Despite this, Nomura maintained a Buy rating with a ₹1,690 target, arguing that the stock’s 26 per cent fall this year "more than compensates."

Kranthi Bathini, equity strategist at WealthMills Securities, stated that the markets are in a "corrective phase," with profit booking often seen ahead of the earnings season, coupled with foreign institutional investor (FII) outflows. He attributed the decline to "multiple reasons," including FII outflows and crude oil prices exceeding $100 a barrel. For ordinary savers, this suggests a period of market volatility driven by various factors rather than a single cause.

Brokerages generally remain positive on Bharti Airtel. J.P. Morgan trimmed its target to ₹2,240 (Overweight), citing a push-out of tariff hikes from 3QFY27 to 1QFY28, which led to a cut in earnings estimates. Nomura, with a target of ₹2,360, named Bharti its top pick, believing its current valuation discount to Jio Platforms is unjustified and expecting the gap to narrow once Jio goes public. On Airtel's ₹50 postpaid hike, Morgan Stanley noted it was "reactive, slightly more competitive." Bharti leads on average revenue per user (ARPU) at ₹264, against Jio’s ₹215.6 and Vi's ₹177. Bathini suggested that in the "longer term, there is value in telecom stocks at this point of time, these are the stocks to buy on dips."

What to watch: FII investment trends and upcoming earnings reports.

Editor's note: The article effectively summarizes the market situation and brokerage views; it uses the source material well.