Aviation stocks rose in trade today after jet fuel or aviation turbine fuel (ATF) prices were cut by 2.6 per cent following the government decision to lower excise duty on the fuel.
ATF prices in Delhi were cut by Rs 1,962 per kilolitre (kl), or 2.6 per cent, to Rs 72,605 per kl (Rs 72.6 per litre). The fuel now costs Rs 72,225 per kl in Mumbai, down from Rs 74,177.
Jet Airways, SpiceJet and Interglobe Aviation stocks gained in an otherwise falling market crippled by the market crash in the US.
While Jet Airways rose over 2% higher to 198 level, SpiceJet rose 3.38% to 70.40 on the BSE. IndiGo airline operator Interglobe Aviation was trading 4.14% or 30 points higher to 776.65 level.
The SpiceJet stock has been gaining for the last four days and has risen 12.17% during the period.
The stock touched an intra day high of Rs 71.30 or 4.70% higher compared to its previous close.
The small cap stock is down 51.74% during the last one year and has lost 51.97% since the beginning of this year.
The Jet Airways stock has been gaining for the last two days and has risen 8.60% during the period.
The stock opened at a loss of 3.78% in trade today. The Jet stock hit an intra day high of Rs 198.05 or 4.71% gains.
The small cap stock is down 60.42% during the last one year and has lost 77.08% since the beginning of this year.
The Interglobe Aviation stock has risen 6.31% during the last two days. It opened with a loss of 2.11% at 730 level compared to previous close of 745.75 level.
The large cap stock hit an intra day high of Rs 801.30 or 7.45 gains in trade today. The cap stock is down 30.42% during the last one year and has lost 35.93% since the beginning of this year.
On Wednesday, the government cut excise duty on jet fuel to 11 per cent from 14 per cent previously to give relief to the aviation industry
that has been in recent weeks hit hard by rising fuel prices and plummeting rupee.
The move came after jet fuel prices this month hit their highest level since January 2014. Rates had risen by 9.5 per cent since July, and over 58.6 per cent since July last year.
The excise duty cut on ATF came after the government's move to raise customs duty on the fuel and 18 other non-essential import items last month, in a bid rein in current account deficit and shore up the rupee.
Basic customs duty of 5 per cent was imposed on ATF. It previously attracted nil duty. This led to an increase of Rs 2,000 per kl in prices.
The government had in 2016 hiked excise duty on ATF to 14 per cent from 8 per cent.
ATF like petrol and diesel is not covered by the goods and services tax (GST) regime, that on July 1 last year amalgamated 17 different central and state taxes.
The central government currently charges 14 per cent excise duty on ATF.
On top of this, states charge up to 30 per cent sales tax or VAT - Odisha and Chhattisgarh have 5 per cent VAT while Tamil Nadu taxes ATF at 29 per cent, Maharashtra and Delhi at 25 per cent and Karnataka at 28 per cent.