Aviation scrips such as Jet Airways, SpiceJet and IndiGo moved sideways this morning after oil prices shot up in response to the US move to abandon the Iran nuclear accord.
On Wednesday, Brent crude futures for July series soared 2.5 per cent to $76.73 a barrel -- the highest since November 2014.InterGlobe Aviation, which runs IndiGo, and Jet Airways lost 2 per cent at Rs 1,173 and Rs 501.65, respectively, at around 10 am.
SpiceJet was marginally up 0.37 per cent at Rs 122.80.Mayuresh Joshi, Fund Manager, Angel Broking, said, Depreciation in the rupee along with increase in crude prices is a double whammy for aviation companies.
The revenue per available seat kilometres is also showing some signs of stress because of competition and pricing pressure.
RASK or revenue for available seat kilometre is probably looking constrained at this point of time." He told ET Now: "With crude staying at elevated levels, aviation stocks might also enter a phase of time correction like the OMC pack.
So, again one needs to wait for decline, but within this pack I think Spicejet is something that I will continue to prefer.Joshi has a piece of advice: Like oil marketing companies one really needs to wait for declines in aviation stocks for better entry points.There are more headwinds.
The rupee plunged 37 paise to 67.45 against the dollar early on Wednesday following surging demand for the greenback amid foreign capital outflows.