Airline Stocks Soar; IndiGo Jumps 4.6% and SpiceJet Rallies 4% in Morning Trade

Shares of India's biggest airlines jumped during morning trade on Thursday, breaking a recent trend of slow and flat trading. The rise was led by the country's largest airline, InterGlobe Aviation (IndiGo), and budget carrier SpiceJet Ltd., as big institutional investors rushed to buy shares at lower prices.

InterGlobe Aviation, which runs IndiGo, saw its stock price climb 4.60% to hit a high of ₹5,454.00 on the National Stock Exchange (NSE), up from its previous close of ₹5,207.20. At the same time, SpiceJet Ltd. rose 4.08% on the Bombay Stock Exchange (BSE), trading at ₹12.75 with over 6.5 million shares being traded by mid-morning.

Drivers Behind the Rally

The sudden surge in airline stocks is because of easing macroeconomic pressures and regulatory relief. The collapse in global crude oil prices, with Brent crude slipping below $73 a barrel, returning to pre-Iran war levels, is a major reason. Because aviation turbine fuel (ATF) typically commands 40% to 60% of an airline’s operating expenses, the decline alleviates margin pressures. Investor sentiment has been further fueled by the recent approval of a ₹10,000 crore ATF Price Stabilisation Fund, which is aimed at shielding carriers from future energy market volatility. The aggressive "Buy" recommendations from major brokerages have also prompted investors to buy up shares at attractive, discounted levels. 

What Market Experts Are Saying

This sudden rise is closely tied to new reports from stock market experts (brokerages). Top Indian firm Motilal Oswal gave a strong 'Buy' tag to IndiGo shares, setting a target price of ₹5,600. Experts from the firm noted that even though airlines have faced higher costs recently due to changing fuel prices, the stock had dropped 15% to 20% over the last six months. This drop made the shares attractive and cheap for long-term investors to buy again.

Similarly, global research firm Goldman Sachs kept its 'Buy' rating on IndiGo with a target price of ₹5,200. IndiGo easily cleared this target during today's trading. Investors are looking past short-term challenges and focusing on the airline's big future plans, which include adding 10% more passenger capacity in the coming months.

The Indian airline industry has faced tough times recently after domestic aviation turbine fuel (ATF) prices rose by 10% earlier this month. However, positive news from global markets helped investors look past these fuel hikes.

Reports indicate that international shipping and flight routes through the Strait of Hormuz are expected to return to normal within the next 30 days. Analysts believe this will make global jet fuel supplies steadier, which helped bring fresh money back into travel and aviation stocks today.

For SpiceJet, today's 4.08% jump brings some relief to everyday investors. The smaller airline has had a tough year, trading near the bottom of its 52-week range, from ₹9.53 to ₹42.99. To fix this, SpiceJet is focusing heavily on adding more planes to its fleet. The airline plans to lease three Airbus A320 aircraft very soon to handle the rising number of summer travelers.

As the stock market moves into the afternoon session, IndiGo's average trading price remains strong at ₹5,393.89, showing that big buyers are still actively purchasing the stock at higher levels.

Also read: How Much Does a Stronger Rupee Really Reduce India’s Oil Import Bill?