Since the Supreme Court’s announcement on adjusted gross revenue (AGR) and dismal Q2 results, stocks of both telecom firms have traded under pressure.

Even as Bharti Airtel and Vodafone Idea shares largely continue to remain under stress, the investors are concerned about how to go ahead. Since the Supreme Court’s announcement on adjusted gross revenue (AGR) and dismal Q2 results, stocks of both telecom firms have traded under pressure. In such a scenario, the retail investors should focus on firms with predictable cash flow, MD, Kotak Mahindra AMC, Nilesh Shah told CNBC TV-18 in an interview. Being underweight on the telecom sector for the last five years has largely worked for him, he added. Even as he continues to evaluate the telecom sector, a stable policy is what’s needed the most, Nilesh Shah also said. A kind of policy is required that provides some ability to predict what will be the future cash flow from the companies in which an investor is investing, he also said. Bharti Airtel and Vodafone Idea have reported a combined loss of over Rs 70,000 crore in the quarter ended September.

The government last week sent notices to all the telecom operators and internet service providers to pay their license fee and spectrum usage charge dues to the government as per the definition of what constitutes adjusted gross revenue given by the Supreme Court in its order dated October 24, 2019. In addition, dismal Q2 earnings have also fueled the troubles for the past and existing telecom firms.

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On being asked about the trigger for the stock markets, Nilesh Shah said that earnings recovery in Q3 and Q4 will provide support to the bourses going forward. On the scope of the banking sector, the veteran investor said that the Essar Steel judgment is positive for the sector and provide it a boost in the coming days.