Share price of SpiceJet gained 5.6 percent intraday and IndiGo operator InterGlobe Aviation 4.5 percent on September 3 after the central government allowed domestic airlines to operate at 60 percent of their pre-COVID level capacity.
Up till now, airlines were operating at 45 percent of their pre-COVID level capacity.
After resuming domestic passenger flights in India from the May 25, the Civil Aviation Ministry had allowed Indian airlines to operate at 33 percent of their pre-COVID levels which was increased to 45 percent from the June 26.
"While this move is sentimentally positive for airline companies, we believe that demand will remain muted in the near future and is expected to pick up post the festive season and maintain a neutral rating on the sector," Jyoti Roy, DVP-Equity Strategist at Angel Broking told Moneycontrol.
He said markets would be keenly awaiting data for the domestic aviation industry for August which would be released in a few days by the Directorate General of Civil Aviation (DGCA).
The aviation ministry issued an order on September 2 stating that, "45 percent capacity may be read as 60 percent capacity," modifying its June 26 order where it had put a 45 percent cap on the number of domestic flights.
Over 1.20 lakh passengers took to the skies across the country on September 1, the Civil Aviation Ministry has said, adding that domestic aviation operations continue to grow steadily.
SpiceJet was trading 2.85 percent higher at Rs 52.30 and InterGlobe Aviation climbed 2.02 percent to Rs 1,273.20 on the BSE. As a sentimental effect, Jet Airways was up 4.34 percent at Rs 28.85.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.