IndiGo, SpiceJet, Jet Airways shares gain on reports govt to scrap 5/20 rule; should you buy

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New Delhi | Updated: April 06, 2016 4:34 PM

The 5/20 rule restricts companies from flying abroad unless they have flown in India for five years and have a fleet size of 20 aircraft.

Aviation stocks, Indigo, interglobe aviation, spice jet, jet airwaysAviation stocks such as InterGlobe Aviation (IndiGo), SpiceJet and Jet Airways gained up to 3 per cent in morning trade on Wednesday on reports that the civil aviation ministry is likely to abolish the 5/20 rule.(Reuters)

Aviation stocks such as InterGlobe Aviation (IndiGo), SpiceJet and Jet Airways gained up to 6 per cent on Wednesday on reports that the civil aviation ministry is likely to abolish the 5/20 rule.

IndiGo, SpiceJet and Jet Airways shares advanced 2.02 per cent, 5.65 per cent and 2.98 per cent to Rs 992.20, Rs 628.15 and Rs 70.75 respectively.

The 5/20 rule restricts companies from flying abroad unless they have flown in India for five years and have a fleet size of 20 aircraft.

India aims to become the third-largest aviation market by 2020 and the largest by 2030. In January 2016, domestic air passenger traffic rose 23 per cent to 7.66 million from 6.25 million during the same month of last year. Passenger traffic during the January-December 2015 increased at a rate of 20.3 per cent to 81.1 million from 67.4 million in the corresponding period a year ago.

Aasif Hirani, director, Tradebulls is bullish on Aviation sector. He said, “Aviation stocks are available at reasonable valuation and this sector is expected to grow comprehensively.”

(With inputs from Reuters)

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