Tech View: Can airline stocks fly higher or will they run out of fuel soon?

The last week's volume in SpiceJet was higher than its previous 35 weekly sessions

Shares of aviation companies have been in the spotlight of late following robust August data, which shows a 34 per cent increase in passenger traffic during the month over the volumes in July. The Street is bullish about strong passenger load factors and plans by the two listed entities to expand their network in the domestic market. What may help sustain the rally is the civil aviation ministry's order revising the capacity to 85 per cent of pre-Covid domestic flights (from 72.5 per cent) and reducing the fare cap restrictions to 15 days from 30 days earlier. READ HERE

Tracking these factors, shares of InterGlobe Aviation had surged to a new all-time high last week. In the past one week, the stock has gained almost 15 per cent. Meanwhile, SpiceJet shares have surged nearly 13 per cent during the same period and crossed the significant 200-days moving average (DMA). The last week's volume was higher than its previous 35 weekly sessions, suggesting growing investor interest.

But can aviation stocks soar even higher from here? Let's take a look at what tech charts suggest:

InterGlobe Aviation Ltd (INDIGO):
Likely target: Rs 2,500
Upside potential: 15%

After seven months of sideways movement, shares of InterGlobe Aviation broke out of the major consolidation range of Rs 1,850 to Rs 1,450 levels, which eventually suggests a rally towards Rs 2,500 levels. Closing basis support stays at Rs 2,000 from a medium-term perspective, hinting at a firm positive bias. The Relative Strength Index (RSI) is also witnessing buying momentum in the overbought category exhibiting upward stock action. CLICK HERE FOR THE CHART

 
SpiceJet Ltd (SPICEJET)
Likely target: Rs 93 and Rs 99
Upside potential: 9% to 15%

After conquering the 200-days moving average (DMA) at Rs 79 levels, the next significant barrier for the stock is Rs 85 mark. Once it crosses that hurdle, the stock may see immediate upside towards Rs 93 and Rs 99, which are the next crucial resistances. The immediate closing basis support stays at 200-DMA. According to the daily chart, the recent surge in stock price has seen strong volumes reflecting the positive interest of market participants. CLICK HERE FOR THE CHART