Indigo, SpiceJet can jump up to 8% as intl flights resume, reveal charts

Both, Indigo and SpiceJet had broken major key levels; For reversal to take place these stocks need to conquer near-term hurdles and show sustainability.

Shares of aviation sector were seen trading favourably on Wednesday after the government lifted the extended ban of two years on international flights with effect from March 27, 2022. Stocks of prominent airlines witnessed a gap -up boost - InterGlobe Aviation zoomed 7 per cent, while Spice Jet was up 4.50 per cent in mid-morning trade.

Fundamentally, the opening for international travel is likely to bring business back on track to pre Covid-19 era. However, skyrocketing crude oil prices, that hover around 14-year highs at $130 a barrel can significantly dent the profitability of these companies.

Stock markets, across the global, have been battered significantly amid worries on the economic impact as key commodiities prices soar to multi-year highs, fueling fears of higher inflation and rate hikes, in the backdrop of the ongoing Russia-Ukraine war. 

Meanwhile, here’s the technical outlook on aviation stocks amid the resumption of foreign air travel:-

InterGlobe Aviation Ltd (INDIGO)
Likely target: Rs 1,800
Upside potential: 6.50%

After August 2020, shares of InterGlobe Aviation, IndiGo, violated the support of the 200-day moving average (DMA) lately and traded with a negative bias. The 200-DMA is presently set at Rs 1,922 level. By doing so, it further breached the horizontal support of Rs 1,800 inducing more selling pressure, shows the daily chart.

Now, with a gap-up trade on Wednesday, the stock may reverse the losing strength and head in the direction of Rs 1,800 level, its initial hurdle mark. Provided the stock succeeds in pulling back the Relative Strength Index (RSI) from the oversold territory.   A closing basis support for the stock is seen at Rs 1,600 level. CLICK HERE FOR THE CHART

SpiceJet Ltd (SPICEJET)
Likely target: 
Upside potential: 8%
 
The shares of SpiceJet sank 36 per cent from its 52-week high of Rs 87.30 in the past three months. The stock price strength has not conclusively entered in the oversold territory of RSI, shows the daily chart. This displays the bullish strength it carries and any stability above Rs 60, which is the obstacle, could see a sharp revival in trend.

Going forward, if the stock holds the bullish bias, the possible uptrend could see added strength as the RSI holds the 35 value. One can see the addition in longs above Rs 55, its imminent hurdle. The current trend explicitly shows at Rs 65 as the immediate target, as per the daily chart. CLICK HERE FOR THE CHART