FDI hopes boost aviation stocks

Govt may take a decision tomorrow on allowing foreign airlines to buy up to 49% stake in cash-starved Indian carriers

Scrips of Kingfisher Airlines, SpiceJet and Jet Airways today surged up to 5.3% on reports that the government may take a decision tomorrow on allowing foreign airlines to buy up to 49% stake in cash-starved Indian carriers.

Kingfisher Airlines settled 5.36% higher at Rs 10.02, while SpiceJet climbed 4.59 to Rs 33.05 on the BSE.

Jet Airways shares gained 2.22% to Rs 361.25.

"It is widely expected that the Cabinet may relax FDI norms in its meeting on Friday. This has sent airline stocks flying. Any move in the cabinet meeting to allow foreign airlines to pick up equity of up to 49% could mean further rise in these stocks," Inventure Growth & Securities Chairman & MD Nagji K Rita said.

"It is listed (in the agenda)," Commerce and Industry Minister Anand Sharma said today.

Cabinet Committee on Economic Affairs (CCEA) is likely to take up the matter tomorrow.

At present, India allows foreign investors, not related to airline business, to buy up to 49% stake in domestic airlines, but foreign carriers are not permitted to invest in them.

Allowing foreign airlines to buy stake in domestic carriers is expected to benefit Kingfisher Airlines, which is burdened by a debt of over Rs 7,000 crore.