Shares of airline operators surged on Thursday, 25 June, after crude oil prices fell to their lowest levels since before the Iran conflict, raising hopes of lower fuel costs for the aviation sector.
SpiceJet share price jumped 5.5%, while InterGlobe Aviation, the parent company of IndiGo, gained 4.7% in early trade as investors cheered the sharp decline in global crude prices.
Oil prices extended their losses for a second straight session, with Brent crude futures for August delivery falling $1.22, or 1.65%, to $72.52 a barrel, while US West Texas Intermediate (WTI) crude declined $1.02, or 1.45%, to $69.32 a barrel. Both benchmarks touched their lowest levels since 27 February.
The decline comes as concerns over supply disruptions in the Middle East continue to ease. According to a Reuters report, U.S. Energy Secretary Chris Wright said oil flows through the Strait of Hormuz have largely returned to pre-conflict levels, with more than 20 million barrels passing through the crucial shipping route over the past 24 hours.
Market sentiment was further supported by expectations of increased crude supplies from the region and the prospect of higher Iranian oil exports following a temporary easing of US sanctions.
An initial accord reached last week to end the US-Israeli conflict with Iran has enabled tanker traffic through the Strait of Hormuz to resume, reducing fears of supply bottlenecks. Oman has also opened temporary shipping routes to facilitate vessel movement through the strategic waterway.
According to Reuters, analysts at Macquarie expect oil prices to normalise toward pre-conflict levels as supply chains adjust and shipping activity stabilises. The brokerage forecasts Brent crude to average $67 per barrel and WTI $62 per barrel during the third quarter, significantly lower than their second-quarter averages.
Lower crude prices are generally positive for airline companies, as aviation turbine fuel (ATF) is one of the largest components of operating costs. A sustained decline in oil prices could improve margins and profitability for carriers such as IndiGo and SpiceJet.
Aviation stocks – Technical Views
SpiceJet share price today opened at an intraday low of ₹12.39 apiece, and an intraday high of ₹12.95 per share.
Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, said the stock has witnessed a sharp rally of over 23% so far this month, supported by easing crude oil prices.
From a technical perspective, the stock has formed a higher-high, higher-low structure and is trading above all key moving averages, indicating a strong bullish trend. Bhosale believes the stock is well-positioned to retest the ₹6,000 level in the near term.
He added that investors should consider a buy-on-dips strategy, with the previous resistance zone around ₹5,200 now expected to act as a crucial support level.
IndiGo share price today opened at ₹5,299.20 apiece, the aviation stock touched an intraday high of ₹5,450, and an intraday low of ₹5,261.20 apiece.
Bhosale, said that while the aviation stock has gained around 4%, it continues to be an underperformer and remains below its key moving averages.
He noted that easing crude oil prices could provide further near-term support to the stock, with the potential to test the ₹14.5–15 range. However, Bhosale prefers InterGlobe Aviation (IndiGo) on declines and recommends using any sharp bounce in SpiceJet’s share price as an opportunity to exit positions.
On the downside, immediate support for the stock is placed around the ₹12 level.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
