Two airline stocks rose 0.28% to 5.08% at 13:45 IST on BSE, with the stocks extending Thursday's gains triggered by PSU OMCs reducing aviation turbine fuel price for sixth succeeding month in January 2015.
Meanwhile, the S&P BSE Sensex was up 395.72 points or 1.44% at 27,903.26.
Among airline stocks, Jet Airways India gained 5.08% after jumping 9.08% yesterday, 1 January 2015.
SpiceJet gained 0.28% after jumping 4.94% yesterday, 1 January 2015.
Aviation turbine fuel (ATF) price reduced for sixth straight month by cumulative 34% till January 2015. A kilolitre of ATF will cost Rs 7520, or 12.5%, less at Rs 52423 in Delhi with effect from 1 January 2015. Rates at different airports vary because of differential in local sales tax or value-added tax (VAT).
Jet fuel or aviation turbine fuel (ATF) typically makes up almost half of an airline's operating cost. Prices of jet fuel are directly linked to crude oil prices.
Crude oil prices witnessed sharp losses in recent months. However, rupee has weakened against the dollar in the recent days. Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. 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. The government has already freed pricing of petrol and diesel.
PSU OMCs review jet fuel prices on the last day of the month based on the average imported oil price in the preceding fortnight.
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