IndiGo, Spicejet and other airline share rates surged up to 5 per cent on BSE on Tuesday, a day right after the Ministry of Civil Aviation raised the flight capacity allowance to 65 per cent. Analysts say even even though the aviation ministry improved flight capacity to 65 per cent, increasing fuel rates, slack monsoon period and worry of an impending third Covid-19 wave could dampen the upward momentum for airline stocks. Barring Jet Airways share value, which hit a 5 per cent reduce circuit at Rs 108.45 apiece, all the airline stocks have been trading in green.
InterGlobe Aviation shares surged 3 per cent, Spiecejet practically 4 per cent, Global Vectra Helicorp 5 per cent and TAAL Enterprises 4.3 per cent. In comparison, BSE Sensex was up 78 points at 52,958 levels. The Civil Aviation ministry in its tweet mentioned taking into consideration the growing passengers’ demand for domestic air travel, the capacity of domestic civil aviation operations will be improved to 65 per cent from 50 per cent from the date of situation of this order and upto 31.07.2021 or till additional orders. “Technically, IndiGo share price faces strong resistance at Rs 1,813. Similarly, SpiceJet faces strong resistance at Rs 84. Close above these levels only could trigger a strong up move,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told TheSpuzz Online.
The airline stocks have witnessed a rebound with partial resumption of travel and amid mass vaccination drive. The current raise in flight capacity from 50% to 65% may well additional add some tailwind, mentioned an analyst. “However, it’s an industry we would like to avoid considering a potential third wave. Not to mention that barring Interglobe Aviation, there was no comfort on the fundamentals front in aviation stocks in the pre-pandemic period. The stock of Interglobe Aviation is close to its lifetime high, touched in the year 2019, offering no valuation comfort,” Richa Agarwal, Senior Research Analyst, Equitymaster, told TheSpuzz Online.
Carriers have been operating with only 50 per cent of their pre-COVID domestic flights because June 1 in accordance with a May 28 order of the ministry. The May 28 selection to bring down the cap from 80 to 50 per cent was taken on the back of a sudden surge in the quantity of active COVID-19 circumstances across the nation, reduce in passenger website traffic and the passenger load (occupancy price) aspect.
(The stock suggestions in this story are by the respective analysis analysts and brokerage firms. TheSpuzz Online does not bear any duty for their investment guidance. Capital markets investments are topic to guidelines and regulations. Please seek the advice of your investment advisor prior to investing.)