Aviation stocks on a roll; SpiceJet, IndiGo, Jet Airways up over 5%

SpiceJet rallied 9% to Rs 57.40, also its highest level since Feb 2011, while InterGlobe Aviation gained 7% to Rs 1,116, highest level since listing on November 10 on BSE

Shares of aviation companies are on a roll with all three stocks – SpiceJet, InterGlobe Aviation and Jet Airways – trading higher between 6%-9% on the Bombay Stock Exchange (BSE).

SpiceJet has rallied 9% to Rs 57.40, also its highest level since February 2011, on the BSE.  The stock soared 24% from yesterday’s intra-day low of Rs 46.25 after the company clarified that the investigation conducted by the Director General (DG) in the matter concluded that the airlines did not indulge in anti-competitive activities.

The counter has seen huge trading volume with around 1.93 million shares changed hands till 02:06 PM, against an average 1.48 million shares that were traded daily in past two weeks on the BSE.

Shares of IndiGo's parent InterGlobe Aviation were also trading higher by 7% at Rs 1,116, its highest level since listing on November 10. The stock appreciated by 46% against its issue price of Rs 765 on the BSE.

Jet Airways too surged 6% to Rs 443 on the BSE.

All these three aviation companies on Wednesday announced that they would pursue legal steps against Competition Commission of India (CCI) order imposing penalties totalling Rs 258 crore on them for anti-competitive practices related to air cargo.

The CCI vide its order dated November 17, 2015, had imposed a penalty of Rs 151.69 crore on Jet Airways and Rs 63.74 crore on InterGlobe Aviation for alleged contravention of the provisions of Section 3(1) read with Section 3 (3)(a) of the Competition Act 2002.

The investigation was initiated against five airlines on the basis of information provided by Express Industry Council of India (EICI) alleging collusion in levy of fuel surcharge on transport of cargo.

Alex Mathew, head of research, Geojit BNP Paribas Financial Services said “Lot of bookings ahead of festival season, good set of second quarter, low aviation turbine fuel (ATF) prices are some favourable reasons that are helping the aviation shares to fly high.”

According to K Subramanyam, Co-Head Equity Advisory, Altamount Capital, “Right now things are in the favour of the aviation industry like low ATF prices, competitive ticket, prices and some Govt attention. As long as the ATF prices remain benign, the next couple of quarters should be good. Thus investors can hold on for the short to medium term ."