IndiGo, SpiceJet Shares Tumble Over 5% Amid Oil Price Spike From Israel-Iran Conflict

The shares of low-cost carrier airlines SpiceJet and InterGlobe Aviation Ltd, parent firm of Indigo, airlines declined over 5 per cent in trade on Friday as a result of hike in brent crude oil prices after Israel conducted airstrikes on targets in Iran, and dip in sentiment post the deadliest plane crash of this year that took place in Ahmedabad.

Israel led airstrikes enhanced the fears of a larger confrontation in a middle east region which is responsible for a third of global crude production.

Shares of Indigo fell as much as 5.78 per cent to hit an intra-day low of Rs 5,175.00, meanwhile, SpiceJet shares declined 5.80 per cent to hit an intraday low Rs 42.16 apiece.

The fall in aviation stocks has a direct corelation with international crude oil prices jumped more than 12 per cent after Iranian media reports confirmed explosions were heard in Tehran resulting in tensions over the U.S. efforts to ensure that Iran halt's production of material for an atomic bomb.

Iran's Supreme Leader has confirmed that multiple commanders and scientists have been killed in the attack and also vowed to retaliate to the attacks.

Reportedly, Brent spiked more than 12 per cent to $77 a barrel, and West Texas Intermediate surged by a similar quantum.

Fuel is a major cost component. A rally in crude oil prices increases the brunt of operating expenses for the airline operators, pressuring stock prices.

Aviation stock price fall also comes in-line with the broader Indian stock market crash today. The benchmark BSE Sensex crashed over 1,300 points, while the NSE Nifty 50 slipped below 24,500 level during the opening trade.

Air India Flight AI171 Crash

The investor sentiment has taken a hit in India's aviation vertical after Air India flight Air India Flight AI171, a Boeing 787-8 Dreamliner (VT-ANB), crashed soon after taking off from Sardar Vallabhbhai Patel International Airport, Ahmedabad. The airlines informed that of the 242 aboard, there are 241 confirmed fatalities.

At 10:43 am on June 13, IndiGo share price was trading 3.77 per cent lower at Rs 5,276.50 apiece, while SpiceJet declined 1.79 per cent down at Rs 43.88 apiece on the BSE Sensex.