Airline stocks soared further high in the intra-day trade adding to yesterday's robust gains, as further reports flowed in about Jet and Air Sahara parting ways from their planned merger deal.
However, Jet Airways and Deccan Aviation failed to hold onto their intra-day gains and closed marginally in the red on the back of profit booking at higher levels towards the end of the trading session.
Jet Airways had jumped nearly 10 per cent in the intra-day trade. In contrast, low-cost air carrier SpiceJet witnessed continued buying support from bargain hunters for the second consecutive day and settled 10.53 per cent higher at Rs 47.25. Jet Airways closed 0.19 per cent down at Rs 704.35, after hitting an intra-day high of Rs 770.
The stock had moved up more than 5 per cent on Wednesday. Newly listed Deccan Aviation, which operates the budget airline Air Deccan, also slipped into the red after paring all its intra-day gains.
The stock shed 0.28 per cent to Rs 89.75. Deccan has managed to close with gains only in two trading sessions so far ever since it made a disappointing debut on the stock market on June 12.
The stock is currently trading nearly 40 per cent below its issue price of Rs 148 per share. Jagson Airlines rose 1.64 per cent to Rs 27.85, while extending its upward rally for the second day in a row.
All the four airline stocks had surged higher on Wednesday on the back of reports about the failure of Jet-Sahara deal, which has been consistently termed as an "overvalued deal" by the market analysts.
The market analysts said the failure of the deal was a blessing in disguise for not only Jet Airways but also other aviation stocks. Jet Airways' market valuation has plunged by nearly 35 per cent ever since the deal was signed earlier this year, a leading market analysts said, while adding that the market has been always sceptical over the deal.
The company's shares had plunged to a 52-week low of Rs 600 on June 9, from a high of Rs 1,344 on July 21, 2005.
Besides the analysts' concerns over Jet-Sahara deal, rising fuel costs and intensifying competition have also weighed down heavily on the airline stocks in the recent past, which has even shrugged off the robust domestic passenger traffic growth of 28 per cent in the last fiscal year ended March.
The market analysts have raised concerns that the sluggish performance of aviation stocks might adversely impact the companies' fund raising plans from both domestic and international markets.
Besides the four currently listed aviation companies, Air India, Indian and Kingfisher have already expressed their intention to enter the capital market, while Jet Airways has announced its plans for an FCCB issue to fund its aircraft purchase.