Has the Maharashtra Government’s Order Caused Turbulence in Airline Stocks?

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Has the Maharashtra Government’s Order Caused Turbulence in Airline Stocks?

By Aditya Raghunath

Investing.com -- Starting November 25, the Maharashtra government’s order on a mandatory negative COVID test for passengers traveling from Goa, Gujarat, Delhi-NCR, and Rajasthan has created another hurdle for already struggling airline stocks.

Maharashtra has been the worst-hit state in India by COVID but has recovered since September. It seems the state doesn’t want to lose the control it has gained over the virus and has imposed this order on people traveling from states where the virus is again surging. People entering Maharashtra from the above-mentioned states by air, rail, or road need to have proof of a COVID negative test that has been taken less than 72 hours before entering the state.

While this is good for Maharashtra, it hasn’t been the case for airline stocks. In the last week, while Nifty and BSE Sensex have hit record highs, Interglobe Aviation Ltd (NS: INGL ) and Spicejet Ltd (BO: SPJT ) stocks have struggled. Indigo has fallen from Rs. 1,702 on November 18 to Rs. 1,650 at the time of this report. Spicejet was at Rs. 74.3 on November 19 and is currently trading at Rs. 71.1.

Apart from aviation, even hotel stocks have suffered. Indian Hotels Co. Ltd (NS: IHTL ) has fallen from Rs. 120 on November 17 to Rs. 114 on last look.

In case other states follow Maharashtra’s example, expect more pain ahead for these stocks.

 

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