Shares of two aviation firms rose by 6.44% to 14.95% at 10:47 IST on BSE after a sharp decline in global crude oil prices yesterday, 12 October 2015.
SpiceJet (up 14.95%) and Jet Airways (India) (up 6.44%), edged higher.
The S&P BSE Sensex was down 69.55 points, or 0.26% at 26,834.56.
Lower crude oil prices benefit aviation firms as jet fuel prices, which typically constitute about 50% of airlines' operating costs, are directly linked to international crude oil prices.
In global commodities markets, Brent crude prices edged higher after previous trading session's sharp decline. Brent for November settlement was currently up 40 cents at $50.26 a barrel. The contract had slumped $2.79 a barrel or 5.29% to settle at $49.86 a barrel during the previous trading session. Brent for December settlement was currently up 40 cents at $50.65 a barrel.
However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.
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In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 64.8950, compared with closing of 64.755 during the previous trading session.
Meanwhile, a weak rupee impacts aviation sector adversely as almost a third of operational expenses of aviation firms are denominated in dollars. Among the payments made in dollars include, rentals of leased aircraft, maintenance, spare parts and salary paid out to foreign crew.
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