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Vodafone Idea Share Price Slips As FPO Momentum Settles

Indian telecoms giant Vodafone Idea share price declined on Friday, trading at Rs. 13.45 at the time of writing.  Vodafone Idea held a follow-on public offer (FPO) on Thursday, leading to an all-time-high daily trading volume of over 400 crore shares at the National Stock Exchange of India (NSE). That triggered an upward momentum for the VID share price, leading to an intraday gain of 6.1%. That signaled a potential for further gains on Friday, considering that the shares had been listed at over 7% premium.

The company’s attractiveness to investors is underlined by the fact that its follow-on IPO was oversubscribed by 6.36 times. Notably, there was a substantially higher participation in the FPO by institutional investors than retail investors. Arguably, this gives the company a strong growth outlook.

Vodafone Idea floated 1,636 crore shares worth Rs. 18,000 crore between April 18-April 22, in what became India’s largest FPO in history.  Nonetheless, the share price is below its January opening price by 26%, putting many investors in losing positions.

Despite the success of the FPO, Vodafone Idea faces a mountain to climb, with the market currently led by Bharti Airtel and Reliance Jio. The next frontier id the rollout of 5G connectivity and the expansion of its 4G network reach. Therefore, the capital raise gives it muscle to take on the competition in a frontier where it is currently disadvantaged.

Technical analysis

IDEA share price is on an upward momentum as signaled by the RSI indicator. However, the buyers will need to keep the price above the 13.15 pivot mark to sustain the upside. That could push IDEA to break the resistance at 13.90 and potentially test 14.45. However, a move below 13.15 will favour the sellers to be in control, and IDEA will find support at 12.65. A continuation of control below the pivot mark will likely break the support, and could propel movement lower to test 12.15.