Warren Buffett effect lifts Indian airline stocks

MUMBAI: Shares of domestic airline companies soared on Monday as global investor Warren Buffett-led Berkshire Hathaway's $10 billion investments in four US airlines in the past few months boosted sentiment.

On Monday, Jet Airways ended up 5.4% at Rs 445, SpiceJet jumped 6.7% to Rs 76 and Indigo airline’s parent InterGlobe Aviation gained 3% to Rs 863.7.

“We are seeing a spillover effect due to the Warren Buffett effect after he stated that he has bought airline stocks in the US. Also, market expects oil to be in the range bound in the $55-60 (per barrel) band,” said Sanjiv Bhasin, executive VP-market and corporate affairs at IIFL.

However, this could also mean that investors are running out of fresh ideas with midcaps indices near record levels and playing up these stocks for short term momentum.

“Market is at a point where Nifty is near 9000 and airline sector was one such which had not done much recently,” said Bhasin.

In the last one week, SpiceJet has gained the most among aviation stocks by 17% followed by Jet Airways which has surged 16%. InterGlobe Aviation has gained the least, by 4.7%, which analysts said because at a PE of 17.5 times, it is more expensive than Jet Airways and SpiceJet which are trading at a PE of 6.7 times and 9.9 times respectively.