In India, air travel is slowly becoming popular among people. About 1000 Indians who are accustomed to air travel perform nearly 20 trips in a year as against 60 in China and 2300 in United States. This reveals that aviation has not made much penetration amongst Indians.
Before 1990s the domestic sector was controlled by Air India and Indian Airlines (both state owned). After opening the Indian airpsace to private operators, several aviation companies have entered the market. Some of the airlines operating in the ‘90s are non existent today, like East West Airlines, Modiluft, NEPC etc. There are many private airlines in India of which only 3 are listed at NSE viz. Jet Airways, Deccan Aviation (Air Deccan) and Global Vectra Helicorp. First two offer passenger services using traditional aircraft while Global Vectra offers helicopter services.
The following table shows the percentage gains for these three stocks in the last one year.
| Scrip | 1 month | 3 month | 1 year |
| AIRDECCAN | 1.07 | 20.79 | 72.81 |
| GLOBALVECT | 0.81 | (8.04) | 6.75 |
| JETAIRWAYS | 12.96 | 38.23 | 54.53 |
The following chart shows the prices of the scrips on various dates.
The following table shows the IPO price, highest close till date and fall from highest close.
| Scrip | IPO price | Highest Close | % Fall from HC |
| AIRDECCAN | 148 | 159.15 | (10.74) |
| GLOBALVECT | 185 | 318.5 | (37.16) |
| JETAIRWAYS | 1100 | 1375 | (39.65) |
It can be seen that though Air Deccan has lost 10.74% from its highest close, it has gained 72.81% in the last 1 year. Importantly, it declared a LOSS of Rs.213 crores for the financial year ending March 2007. The primary reason for the stock’s gain was Mr Vijay Mallya, who runs another airline company Kingfisher Airlines took 26% stake.
Global Vectra Helicorp has gained only 6.75% for the last 1 year. Interestingly, this company has declared a net PROFIT of Rs.12.5 crores for the financial year 2006 - 2007. But it has lost 37% from its highest close.
Jet Airways declared a net profit of Rs.28 crores for 2006 – 07 compared to Rs.452 crores for the previous year 2005 – 06. Despite a huge slump in net profits, the stock has managed to gain 55% in the last 1 year. It acquired Air Sahara, another private airline.
These statistics clearly indicate that the market expectations were completely different.
Let us now discuss the medium term charts of all the three stocks.
The stock closed below its 61.8% retracement at 101.65 for four weeks in a row. After it bounced back, though it could break its previous high at 162.90 it did not close above it. For the last 3 months, the stock is fluctuating in the 130 – 150 range. It is still bullish, as higher highs and higher lows have been formed. But it may take a while for the stock to break its previous resistance. The subdued volumes in the daily chart suggests that a breakout is unlikely at the moment. So taking fresh positions is not ideal now.
This stock had almost fallen back to its support level at 154.15. A bearish “Three outside down” pattern had been formed in early July. Note that the support trendline has been broken and stock has closed below it for 6 weeks in a row. Though the stock may recover slightly due to technical rallies, fresh buying in the stock cannot be contemplated now.
The technical scenario for Jet Airways is a tricky one. It also had broken its support trendline and closed below it during March 2007. It has bounced back from a low of 533 to a high of 970 but when it broke previous resistance at 805 it ended the week with a red candle and volumes were not great either. The high 970 made during the next week was not sustainable and stock is just testing its support levels. Unless it closes above 970 with good volumes in medium term charts, one may not take a long position in the stock.
Conclusion:
The medium term charts of the three stocks do not favour investment now. One may consider new exposures after reassessing the technicals later.