Govt revises price band of air fares; time to buy IndiGo, SpiceJet?

The price hike has attracted the attention of market participants, now the stock needs to cross significant resistance to move ahead.

Ministry of Civil Aviation, on Thursday, revised fare price band on flights with 90 to 120 minutes of duration to Rs 3,900, up from Rs 3,500 earlier. The cap on maximum chargeable fare has been raised to Rs 13,000 from Rs 10,000. READ ABOUT IT HERE

The decision comes after Civil aviation minister Hardeep Singh Puri recently said that floor and ceiling price on airfares was an extraordinary measure to prevent a tariff war, which could trigger bankruptcies.

That said, executives of airlines believe that it may be difficult for them to hike fares as demand was still uncertain.

Nonetheless, shares of aviation firms InterGlobe Aviation and SpiceJet were soaring at the bourses on Friday. In the intra-day trade, IndiGo shares jumped up to 4.7 per cent on the BSE to hit an intra-day high of Rs 1,704 apiece while those of SpiceJet soared 7 per cent to a high of Rs 94 per share.

In this backdrop, here is how aviation stocks look on charts:

InterGlobe Aviation Ltd (INDIGO): Unless the stock breaks above the Rs 1,800 levels, upside bias is going to meet selling pressure. That said, the stock has a support of Rs 1,500 levels which, if defended aggresively, may trigger an upward breakout, as per the weekly chart. The Relative Strength Index (RSI) needs to cross 63 value to conquer the underlying resistance. Once that happens, the price breakout may push the srtock price towards Rs 1,950 levels. CLICK HERE FOR THE CHART

SpiceJet Ltd (SPICEJET): The gap-up move on February 12 needs to close above the 50-days moving average (DMA), placed at Rs 92.15 levels, to see an upside towards Rs 102, which is its next resistance. On the downside, the stock has a closing basis support at Rs 86 levels, as per the daily chart. The RSI has crossed the resistance of 54 value which can strengthen if the stock price succeeds in holding 50-DMA firmly. CLICK HERE FOR THE CHART