Sectoral Outlook: AVIATION CRASHES FOLLOWING WEAKENING RUPEE

by khalid on 26/09/2011 · 0 comments

BSE saw a sharp decline in the stock prices of commercial aircraft companies when the domestic currency showed even steeper falls against the US$. The domestic private air carriers tanked to a whopping 8% in September alone owing to the weakening trends shown by the rupee. The strengthening $ has put pressures on the operating margins of the private players in the aircraft industry.

Growing concerns surrounding the world economic scenario of the European crisis getting stronger and recoveries seeming a distant dream gave the aviation sector a tweak too, let alone the BSE Sensex.

The shares of major players like Jet Airways (fell by 7.73%), and Kingfisher (down by 6.63%) stooped drastically which eventually has taken a toll on their operating expenses raising the cost of inputs like fuel, spare part and equipments that are generally traded in US dollars. Spice Jet was not far behind with a 5.15% fall on the BSE and now stands at the Rs. 23 mark as per the latest available data.

The rupee trends have been dismal and in this very month it has weakened by approximately 420 paise reaching an astounding 28 month low at Rs 49.90 per USD. The central bank and other chief economists predict that the rebound of the rupee is majorly dependent upon the stabalization scene of the European crisis until then the domestic currency shall be sensitive and fragile.

‘Bell the Bull’ warns that it shall be alarming, but if the trend continues, USD might even reach

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