Indian Airline Regulator Grounds Soaring Airfares

Indian airline stocks, which soared along with rising airfares to 52-week highs during?the November?festival season, are coming back to reality.

In early trade Thursday, Kingfisher Airlines Ltd. lost 2.3% to 62.40 rupees ($1.38), SpiceJet Ltd. was 2.9% lower at 80.80 rupees and Jet Airways (India) Ltd. slid 1.6% to 779.15 rupees.?These stocks are?down 31.4%, 17.1% and 15.9% respectively?from the yearly highs seen around the?Diwali festival?last month, when people usually fly to be with their families.

The airline industry in India is making a brisk recovery thanks to high economic growth and increased demand for business travel, with domestic traffic up 18% at 41.9 million passengers during the January-October period. Ticket prices have risen by about 15% from a year earlier, analysts say.

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Indian Metal Stocks Fall on China Concerns

In India on Friday, metal stocks turned lower on concerns over possible monetary tightening to come over the weekend from China. The BSE Metal Index was down 0.6% with Hindalco Industries down 1.1% to 219.75 rupees ($4.86), Jindal Steel down 0.9% at 654.70 rupees and Tata Steel down 1.2% at 616.30 rupees.

China is the world’s biggest consumer of metals, so a drop in sales volume could hurt suppliers.

“Apart from the fears of monetary policy tightening in China, a strong dollar against the rupee also remains a cause for concern,” says managing director Deven Choksey of K.R. Choksey. Recent strength in the U.S. dollar pushes down metal prices, quoted in dollars, as the local currency’s buying power falls, hurting demand. Mr. Choksey is still bullish on the sector in the long term owing to expectations of high demand.

-Swagata Gupta

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