How Telecom Stocks Reacted to TRAI IUC Charge cuts.

The Telecom Regulatory Authority of India (TRAI) late on Tuesday (Post market hours) said interconnect usage charges (IUC) for mobile calls will be cut to 6paise/min from 14 paise, effective Oct. 1. The fee will be scrapped from 2020.

It is widely believe that cuts in IUC charges will eventually impact telecom operators(Bharti Airtel, Vodafone) annual profitability and Reliance Jio would be the key beneficiary of the move.

News Sentiment is negative for Bharti Airtel, Idea and positive for Reliance. However initial reactions are inline with News Sentiment anticipation as Reliance opened Gap up; Bharti and IDEA opened gap down and all three stocks started moving against the news sentiment during the intraday. However going against the news sentiment post the market open would have favored a trader.

Bharti Airtel Share Price

IDEA Share price

Reliance Share Price

Moral of the Story : Conventional Wisdom Kills the trader.

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