Indian aviation stocks sink amid Ahmedabad crash, oil price surge
What's the story
Shares of Indian aviation companies took a major hit on Friday after an Air India crash and a spike in global crude oil prices.
The incident involved an Air India Boeing 787-8 Dreamliner that crashed in Ahmedabad shortly after takeoff, killing 241 people of the 242 on board.
The tragedy has left investors cautious and wary about the future of the aviation sector.
Market impact
IndiGo and SpiceJet shares fall sharply
Following the crash, shares of InterGlobe Aviation (IndiGo) fell by nearly 6% to ₹5,175 on the Bombay Stock Exchange (BSE).
SpiceJet's shares also fell by 5.5%, trading at ₹42.16 on the BSE.
The market reaction underscores how sensitive investors are to incidents like these and their potential impact on airline operations and profitability.
Global unrest
Israel-Iran conflict adds to market woes
The fall in aviation stocks was further aggravated by rising geopolitical tensions in the Middle East.
Israel launched airstrikes on Iran's capital, Tehran, targeting nuclear and missile facilities.
The Israeli government has warned of possible retaliatory attacks, adding to global uncertainty.
This political unrest has contributed to the already volatile market situation for Indian aviation companies.
Fuel costs
Crude oil prices surge nearly 10%
The ongoing conflict has also led to a spike in crude oil prices, amid fears of supply disruptions.
Brent crude futures jumped as much as 10% intraday, hitting $78.5 a barrel—the highest since January 27—and up nearly 12% for the week.
West Texas Intermediate (WTI) crude also surged by nearly 9.5% to $74.47 after hitting an intraday high of $77.62 earlier today.
Cost impact
Perfect storm for aviation stocks
The spike in oil prices is likely to affect the aviation sector, as aviation fuel constitutes a major chunk of operating costs for airlines.
This development has added to investor concerns over profitability and operating margins in the industry.
The combination of a tragic plane crash and rising fuel costs has created a worry for Indian aviation stocks on Friday.