Mahanagar Telephone Nigam Limited's decision to scrap the buyback proposal including the government equity may improve the sentiment at the counter. According to market sources, fears of a likely swap of equity between VSNL and MTNL, the latter missed recent rally in the telecom scrips. The scrip which crossed Rs 200-mark on January 11 had since then been on downtrend. Early in the month, the scrip touched a low of Rs 149. However, in sympathy with other telecom scrips, the stock rose to touch a high of Rs 176 on February 17. With the sentiment poor at the counter, the stock could not sustain the rally and has fallen to Rs 164. Market sentiment has weakened due to concerns of increased government intervention.

MTNL had earmarked Rs 528 crore for the buyback following Union Cabinet's decision in October last to allow MTNL to buyback upto five per cent of its shares as part of government's move to disinvest its equity in public sector. The company is likely to use thisfunds to finance its major expansion and modernisation projects. MTNL launched its internet services earlier this month at Mumbai and Delhi as part of its expansion drive.Now with the fears of government intervention put to rest, marketmen believe MTNL shares represent excellent value and strong absolute share-price upside. As per leading research house the scrip which is currently trading at Rs 164 is likely to touch Rs 250 in year's time.

Heavy selling at Sterlite counter

With the Ministry of Finance ordering Sterlite Industries to honour the Rs 221 offer for Indal shares in cash, the operators seem to have pressed the sell button at Sterlite counter. The scrip fell by Rs 8 on the Mumbai Stock Exchange and closed at Rs 152. Even on the National Stock Exchange, the scrip opened at the day's low of Rs 146, but it later recovered to close at Rs 151.4 as it was the last day of settlement.

According to marketmen, in case the company is unable to pay the asked amount to the Indal shareholders itsescrow amount will be forfieted. The company had earlier also suffered when its smelter plant was closed down by the State government for nearly two months.