Our markets now have came at that point where a investor should be cautious after ongoing problems in relations with China and Pakistan. Like surgical strike, if any same kind of news came then our markets would definitely change their overall trend to negative. But it’s true that their chances of happening are very less.
Reliance Jio expansion
Recently, we saw a great surge in most of the telecom related service provider companies but only some of them have sustained that gain after Jio announcement on 21 July. From august, Jio will bring a featured phone at the cost of Rs.0 for Jio customers and another big step of company is of entering in likely DTH business through Jio.
I think there are two main reasons for launching a free cost handset. First is to retain Jio users for long time as the purchasing of Jio phone will connect the users from company for another 3 years. Second is to gain another market segment of public where it can’t reach. Jio’s biggest disadvantage is of its only 4G capability which means no 2G and 3G phone users can use it. While, they have a option of JioWifi but it doesn’t work for them as it will cost them. Now with its new 4G phone, company would be able to reach all the phone users who can’t afford 4G phone or wish to use Jio.
While this steps will definitely help the company to expand its telecom business, i think its 4G phone would not get same kind of response that Jio received. Paying Rs.1500 for multimedia phone sounds higher even when you would get your money back in 3 years. In current market, there are many options to buy secondhand 4G smartphone below Rs.2000.
Although, all these steps shows how much confident does Chairman of RIL have on telecom business and its future. No doubt that telecom sector has great future in long-term but Jio has bring some difficulty slabs for other companies over which they have to come out.
Talking about Reliance stock, i think levels around Rs.1600 are good to book profit if you bought at lower levels. However, i think Reliance would show another part of rally in short-term only if its Jio phone entry become successful.
Momentum in JP Group
This is second time when i am including topic of JP Group in my Post this month only because of highly momentum that we are seeing in group especially JP Associate. JP Associate which is the main business company of the group has rose almost 300 percent in last two months. While Jaypee Infra and Jaiprakash power rose almost 100 percent 40 percent in same period.
Almost 1 year ago, i suggested to buy JP Group especially JP Associate and JP Infra when they were quoting around Rs.5-6. But now when both of them have rose 4-5 times, i have changed my bullish call to same group company JP Power where opportunity seems very large. Even after JhunJhunwala stake buying, i think there can be a large risk in short-term investment in JP Associate because we don’t know exactly about why he had purchased stake. Its true that JP Associate can move further more but if you know that you can also buy another same group company at less valuations and risk, then why should go with the large risk! And speaking politely, i think the price of JP Power must be around Rs.9-10 after this kind of rally. Therefore, i am recommending to buy JP Power instead of JP Associate for short-term. While in Jaypee Infra, i would recommend to hold for long-term.
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