War­ren Buffett’s $10-b Play on US Air­lines Lifts In­dian Avi­a­tion Stocks

The Economic Times - - Smart - Mar­ket In­tel­li­gence

Mum­bai: Shares of do­mes­tic air­line com­pa­nies soared on Mon­day as global in­vestor War­ren Buf­fet­tled Berk­shire Hath­away’s $10 bil­lion in­vest­ments in four US air­lines in the past few months boosted sen­ti­ment in the stocks. On Mon­day, Jet Air­ways rose 5.4% to ₹ 445, SpiceJet jumped 6.7% to ₹ 76 and I n d i g o a i rl i n e ’ s p a r e n t In­terGlobe Avi­a­tion gained 3% to ₹ 863.7.

“We are see­ing a spillover ef­fect due to the War­ren Buffett ef­fect af­ter he stated that he has bought air­line stocks in the US. Also, mar­ket ex­pects oil to be range bound in the $55-60 (per bar­rel) band,” said San­jiv Bhasin, ex­ec­u­tive VP­mar­ket and cor­po­rate af­fairs at IIFL. How­ever, this could also mean that in­vestors are run­ning out of fresh ideas with mid­cap in­dices near­ing record lev­els and play­ing up these stocks for short-term mo­men­tum.

“Mar­ket is at a point where Nifty is near 9000 and air­line sec­tor was one such sec­tor, which had not done much re­cently,” said Bhasin.

In the last one week, SpiceJet has gained the most among avi­a­tion stocks by 17% fol­lowed by Jet Air­ways, which has surged 16%. In­terGlobe Avi­a­tion has gained the least, by 4.7%, which an­a­lysts said is be­cause it is at a PE of 17.5 times, more ex­pen­sive than Jet Air­ways and SpiceJet, which are trad­ing at a PE of 6.7 times and 9.9 times, re­spec­tively. HIGHS & LOWS

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