Reliance on Monday chalked out its plan to be debt-free by March 2021 by paring its stakes in petrochemical business and showed its intent to get stronger in retail and telecom sector.
At 1120 hours IST, BSE Telecom index was over 4 percent down at 922, with 11 of the 16 components trading in the red.
Shares of Bharti Airtel, Vodafone Idea and MTNL were the worst hit, falling up to 6 percent.
Most telecom stocks plummeted in the wake of a volley of announcements by Reliance Industries (RIL) on August 12. Reliance chalked out its plan to be debt-free by March 2021 by paring its stakes in petrochemical business and showed its intent to get stronger in retail and telecom sector.
A stronger Reliance is not good news for its competitors, say industry observers.
"Bharti Airtel may be the worst hit due to Jio's aggression in the fiber business. It has to increase its capex in telecom and data segment which will put pressure on margin and cash flow as well," said Sameer Kalra, Founder of Target Investing.
Shares of Bharti Airtel plunged nearly 7 percent while those of RIL surged as much as 12 percent intraday on August 13.
Brokerages are bullish on the prospects of RIL. Macquarie has upgraded RIL to 'outperform', raising the target price to Rs 1,370 from Rs 1,220. The foreign brokerage said it expects a 19 percent upside, following the stream of bullish news flow at the AGM.
Morgan Stanley, too, has upgraded RIL to 'overweight' from 'equal-weight', fixing the target price at Rs 1,349 per share, citing it is time to relook at the stock.UBS, CLSA and Nomura have buy recommendation on the stock with a target price at Rs 1,500, Rs 1,530 and Rs 1,600 per share, respectively.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.