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04-14-2012, 08:49 AM #1
Aviation stocks rally on FDI hopes, cabinet meet next week
Aviation stocks on Friday shot up by up to 10 per cent amid growing expectations that the government could soon allow foreign direct investment (FDI) in aviation sector, making it easy for foreign airlines to buy stakes in domestic carriers.
SpiceJet soared 10.19 per cent to close at Rs 31.35, while Kingfisher Airlines gained 2.33 per cent to close at Rs 19.80 on the Bombay Stock Exchange. Similarly, Jet Airways gained 1.49 per cent to Rs 353.75.
The rally in these stocks largely outperformed the weak broader market, where the BSE benchmark Sensex settled 1.37 per cent lower at 17,094.51.
Aviation stocks had pared early gains on Thursday and closed with 2-3 per cent losses as investors were disappointed that proposal to allow foreign airlines to buy up to 49 per cent stake in Indian carriers was again deferred.
Allowing foreign airlines to buy stake in domestic carriers is expected to benefit cash-starved carriers who are servicing huge debts, analysts said.
At present, India allows foreign investors, not related in any way to airline business, to buy up to 49 per cent stake in domestic airlines, but foreign carriers are not permitted to invest in them.