Vodafone Idea rebounds 55% from over 2-year low touched on Thursday

Shares of Vodafone Idea (Vi) surged 18 per cent to Rs 7.04 on the BSE in the intra-day trade on Friday, a day after the government introduced a Bill in Parliament to nullify the provision of retrospective tax in the Income Tax Act. With today’s gain, the stock of the telecom services has bounced back 55 per cent from Thursday’s intra-day low of Rs 4.55 on the BSE.

At 09:47 am, Vi was trading 16 per cent higher at Rs 6.88, as compared to a 0.04 per cent rise in the S&P BSE Sensex. A combined 242 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. The stock trades in the futures & option (F&O) segment, which has no circuit limits.

The stock of Vi had corrected 45 per cent in the past three trading days and hit a two-year low on Thursday in the intra-day trade. The stock has been in the downtrend ever since reports suggested Kumar Mangalam Birla has told the government that he is willing to give up promoter stake in the company and Vodafone Group Plc has ruled out any further equity infusion in its debt-ridden telecom joint venture in India.

The government’s proposed Bill proposes to do away with the contentious retrospective tax demand provisions. The move will provide relief to Vodafone and Cairn Energy that were embroiled in a tax tussle with the Indian government.

The Bill would withdraw the retrospective amendments to the Income Tax Act that had raised demands on Vodafone, Cairn and some others, indicating a move to attract foreign investments.

This comes soon after Aditya Birla Group Chairman Kumar Mangalam Birla offered to transfer the group’s ownership in Vodafone Idea to the government in a last-ditch effort to keep the cash-strapped telco from collapsing. Vodafone plc has maintained it would not throw good money after bad, the Business Standard reported.