Jet Airways shares rose by 13.8%, SpiceJet shares by 8% and InterGlobe Aviation by 5.7% intraday on the BSE.
Jet Airways share price: Aviation stocks soared on Wednesday, with shares of Jet Airways climbing nearly 14% intra-day, after media reports said the government is likely to submit a proposal to the Election Commission to cut excise duty on aviation turbine fuel (ATF). Jet Airways shares rose by 13.8% to an intra-day high of Rs 199.70 per share on the BSE, while SpiceJet shares rose 8% to Rs 70.50. Shares of InterGlobe Aviation, the operator of low-cost airline IndiGo, edged higher by 5.7% to a high of Rs 765.30 on the BSE.
Aviation stocks have taken a hit in the recent months due to surging crude oil prices and a depreciating rupee. Jet Airways shares have plunged 79% this year up to their last close, while Interglobe Aviation has lost 40% this year. Spicejet shares have slipped nearly 55.3% from its last year’s closing price.
According to media reports, the country’s Finance Ministry is expected to submit a proposal to the Election Commission to cut the excise duty on ATF from the prevailing 14% to 8%. The cut in excise duty on ATF was long due and will have a positive impact on the companies since their costs will likely go down, a Reuters report said on Wednesday quoting an anonymous analyst with a domestic brokerage. The analyst added that the directive may reduce the overhang on aviation stocks, but the positive impact could be offset by poor quarterly results.
All the three airline stocks had dropped to record lows in late September following the government’s move to hike the customs duty on ATF from 0% to 5%. The government recently hiked import duties on 19 ‘non-essential’ items ranging from gems and jewellery to ATF in a major move to narrow the country’s current account deficit (CAD) and stem the fall of the rupee.