ATF price cut lifts aviation stocks

Aviation stocks soared after the government announced a 10 per cent reduction in the prices of Aviation Turbine Fuel (ATF).

Stocks of airline companies Jet Airways and Spice Jet surged to their 52-week highs during intra-day trade even as InterGlobe Aviation Ltd, which owns and operates IndiGo, hit an all-time high of Rs.1,395.50 before closing at Rs.1,341.75, up 8.73 per cent.

Jet Airways stock, which touched a 52-week high of Rs.778.60, closed at Rs.760.60, up 8.28 per cent. Similarly, SpiceJet stock closed at Rs.82.35, up 9.44 per cent. During intraday, the stock had surged to Rs.85.90. The drop in ATF prices would help the airlines to reduce their operating costs, thereby enabling them to report better performance in this quarter.

“It (the sharp rise in stock prices) is more of trading momentum. Investors were attracted to these stocks as the ATF price drop is really sharp and it will help in improving margins. ATF accounts for 30 per cent of the input costs. So everyone is happy. But the question is for how long will oil or ATF prices remain so low. Nobody is factoring this,” said Ambareesh Baliga, independent stock analyst.