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Aviation stocks fly high on Civil Aviation Ministry's green signal for 26% FDI

12 Dec 2011 Evaluate

Airlines stocks ascended amidst sluggish trade after the Ministry of Civil Aviation agreeing to the proposal of Department of Industrial Policy and Promotion (DIPP), allowed foreign airlines to buy 26% stake in the India private airlines. The aviation ministry had earlier proposed to a limit of 24% on the Foreign Direct Investment (FDI) by foreign carriers in the initial draft note prepared by the DIPP.

The ministry had originally raised concerns regarding security and predatory pricing by foreign airlines, affecting domestic market. However, the DIPP had proposed 26% foreign direct investment (FDI) by foreign airlines into the domestic industry on the back of Kingfisher Airlines falling into a severe debt crisis and several others facing resource crunch.

Without giving much detail, senior government official said, the civil aviation ministry has come on board for 26% FDI. Currently, government allows 49% FDI in the domestic aviation services like cargo handling however, carriers are not allowed.However, apart from the finance ministry, home ministry and the planning commission too have supported the draft Cabinet note.

Reacting to this, Kingfisher Airlines is currently trading at Rs 24.10, up by 0.15 points or 0.63% from its previous closing of Rs 23.95 on the BSE.  The scrip opened at Rs 24.80 and has touched a high and low of Rs 24.90 and Rs 23.85 respectively. So far 674243 shares were traded on the counter.

Meanwhile, Jet Airways (India) is currently trading at Rs 238.85, up by 3.05 points or 1.29% from its previous closing of Rs 235.80 on the BSE. The scrip opened at Rs 238.50 and has touched a high and low of Rs 243.45 and Rs 233.40 respectively. So far 317003 shares were traded on the counter.

Peers
Company Name CMP
Interglobe Aviation 4638.75
SpiceJet 13.88
Raymond 422.05
Global Vectra Helico 203.85
Taneja Aerospace 281.55
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