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News Topical, Digital Desk : Vodafone Idea (Vi) shares have seen volatility in recent days. Media reports are saying that the government is preparing a relief package for the company, but investors are being advised to be cautious. On CNBC-Awaaz's Traders Hotline show, Delhi investor Ajinkya asked a question about his investment in Vodafone Idea. He has 50,000 shares, which he bought at a price of Rs 6.50 per share. Market expert Manas Jaiswal also gave advice to the investor.
Market expert's opinion
Manas Jaiswal said that Vodafone Idea's chart structure is weak. He suggests that if the stock bounces back a little and gets some profit, it should be booked. He described Rs 6.40 as an important support level, where the stock has taken support thrice in the last 25 sessions. Investors were advised to put a stop loss at Rs 6.40.
If the stock goes below this level, one should exit the long position to avoid major losses. At the upper level, the stock can go up to Rs 7, where it would be good to book profits. For new purchases, Jaiswal suggested investing only when the stock crosses the 100-day average above Rs 8. Government relief package The Economic Times said in a report this week that the government is working on a relief package for Vodafone Idea, but questions are being raised on the long-term stability of the company. The government is not considering waiving the spectrum usage charge (SUC). If more debt is converted into equity, the government's stake will exceed 49%, which the government does not want. Under one proposal, the company may get the exemption to pay the AGR dues in 20 years instead of 6 years. Currently, Vi has to pay in six installments of Rs 18,064 crore every year. Over a period of 20 years, this installment could be Rs 6,000-8,500 crore annually. Yet models of the Department of Telecommunications (DoT) show that if Vi has to pay the full Rs 18,064 crore by the end of FY26, its cash flow may dry up before FY27. The company's financial position does not look stable even after FY29. The government did an equity swap earlier this year Earlier this year, the government converted Vi's spectrum dues of Rs 36,950 crore (related to auctions before 2021) into equity. This made the government the largest shareholder of the company, with a stake of 48.99%. Due to the four-year AGR and spectrum payment moratorium given in 2022, now all the dues have to be paid in six big installments.
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