Dip in crude oil prices adding bullish fervour to Airlines stocks

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Dip in crude oil prices adding bullish fervour to Airlines stocks
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Airline companies were soaring in trade on Wednesday as a dip in crude oil prices to early-January lows helped traders ramp up their stocks on hopes of strong earnings in the coming quarters.

Also adding to the bullish fervour in this sector were media reports that global giant Qatar Airways was in talks with local leader Indigo Airlines to buy a large minority stake before the latter's public listing on Indian bourses. Profit making Indigo is conservatively valued at $2 billion.

Fuel accounts for nearly half of an airline's operating expenses. Crude oil prices are trading at six-month lows, providing a much needed relief to airlines' finances.

Jet Airways gained 11 percent, or 36 rupees, to 365 rupees, its highest level since June 2nd, on the National Stock Exchange, where 26 lakh shares were traded in the first 90 minutes of trade compared with a 5-day average of 10.5 lakh shares. Jet's market capitalisation stands at 3,700 crore rupees.

SpiceJet rose for a 5th day, to a fresh high, adding 1.1 rupees, or 4.2 percent, to 27.70 rupees on the BSE. 99 lakh shares were traded in the first 1 hour of trade compared with a 5-day average of 92 lakhs on the counter. SpiceJet recently said it would augment its fleet of Boeing aircraft to meet growing demand in the coming quarters.
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Airlines's passenger traffic has grown 20 percent during January-June to 3.88 crore fliers in India, data shows.

(Image credits: stocktips)