Airline stocks rally on talks of likely hike in FDI limit

Aviation stocks saw buying interest in early afternoon trade on Thursday, riding on news that the government may relax FDI norms anytime soon. Jet Airways, which open ed at Rs 542.35, remained in the black through the day, surging to an intraday high of Rs 571.90, or 6.52 per cent. According to analysts, the company is likely to raise funds for its future projects, which may also have been the reason. “There are rumors the government may relax FDI limit in the aviation sector. This influenced trading on the counter. On a stock-specific basis, Jet Airways, which gained most among the airlines stocks, is looking to raise funds for buying new planes and cut debt. We believe the 4 per cent jump was partly due to this,” said Ambareesh Baliga, vice president at Karvy Stock Broking. On Thursday, 3.96 lakh shares of Jet Airways changed hands on BSE, against a two-week average volume of 0.84 lakh shares. On NSE, 16 lakh shares of Jet Airways were traded against a two-week average volume of 2.87 lakh shares. Other counter such as Kingfisher Airlines and SpiceJet inched up 0.50 per cent and 0.27 per cent to close at Rs 50.25 and Rs 56.20, respectively. However, in early afternoon trade, the scrips had jumped 2.60 per cent and 2.23 per cent from their previous close. Baliga said, “Istithmar sold SpiceJet’s share on Wednesday. This may have had an impact.” “The news that government may lift FDI limits for various sectors lifted the market mood. If the norms are relaxed in aviation, domestic airlines will find it easy to raise funds,” said Sudip Bandyopadhyay, MD and CEO of Convexity Solutions.

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The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).