Telecom stocks on Wednesday gained as much as 4 per cent in morning trade, after the government allowed 100 per cent foreign direct investment (FDI) in the sector.
Shares of Idea Cellular rose by 3.84 per cent to Rs 163.50 — its record high on the BSE, while Reliance Communications jumped 3.66 per cent to touch its 52—week high of Rs 151.25. Bharti Airtel was also up 1.94 per cent.
On Tuesday, the government allowed 100 per cent FDI in the telecom sector, meeting a key demand of the fund—starved industry. Earlier, FDI limit in the sector was 74 per cent where 49 per cent was done through automatic route and rest required nod from Foreign Investment Promotion Board.
The idea behind the decision to increase FDI limit in telecom sector is to help the industry get fresh funds to lower financial burden.
The move also brings relief for foreign partners in telecom companies as they can have complete ownership of the business.