Aviation stocks IndiGo, and SpiceJet were trading lower on Thursday, amid rising crude oil prices. IndiGo (InterGlobe Aviation) share price tanked 6.5 per cent to Rs 1,838.75 apiece on BSE, while SpiceJet stock hit a fresh 52-week low of Rs 57.70 apiece, falling over 5 per cent. “The aviation sector is under pressure because of subdued travel demand as a result of additional government-imposed lockdowns to combat new strains of the pandemic, as well as rising gasoline prices and negative currency rates, are all significant dangers and problems for the sector. Global political tensions have added to worries about an already tight energy market,” Gaurav Garg, Head of Research at CapitalVia Global Research, told Financial Express Online.
In the previous session, Brent crude futures touched $90 a barrel for the first time in seven years on the back of tight supply and rising political tensions between Russia and Ukraine that added to concerns about further disruption in an already-tight market, according to Reuters.
Analysts say besides rising oil prices, weak global sentiment and rising COVID-19 cases in India have also added to a fall in aviation stocks. “Weak global sentiment, rising COVID cases in India and crude oil almost at $90 has led to severe weakness in airline stocks. Technically, all stocks look weak but InterGlobe Aviation and SpiceJet near Rs 1770-1780, and Rs 54-55 can be a good buy for a long-term basis,” Pavitraa Shetty, Co-founder & Trainer, Tips2Trades, told Financial Express Online.
Airline stocks have been reeling under pressure since the state owned fuel retailers have increased the ATF prices on account of hardening global oil prices. Analysts expect a further 5 per cent fall in the aviation stocks amid weak markets. “The increase in fuel prices has increased the operation cost of the industry. In addition to that, the rising cases of Omicron and travel restrictions have also dampened the revival of the aviation industry which further pushed the respective stocks lower. We expect a further correction of 3-5 % in the stocks on account of weak market sentiments,” Ravi Singh, VP & Head of Research, Share India Securities, told Financial Express Online.
Another airline stock, TAAL Enterprises, hit a 5 per cent circuit at Rs 1,652.30 apiece, against the last close of Rs 1,739.25 apiece. On the flip side, Global Vectra HeliCorp share price soared over 4 per cent ot Rs 57.70 apiece. Jet Airways (India) stock was up 2.5 per cent to Rs 86.30 apiece in the afternoon deals. In comparison, BSE Sensex was down 1.15 per cent, while NSE Nifty 50 index lost 1 per cent to trade at 17,006 levels.
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