IndiGo, SpiceJet shares surge up to 7% as Brent crude price falls

Shares of InterGlobe Aviation (IndiGo's parent) SpiceJet, rose up to 7% in early deals on Thursday amid a crash in Brent crude prices. Crude oil prices saw one of their steepest single-day declines during overnight trading, with Brent crude tumbling nearly 9% to below $95 a barrel, its lowest level in two months.

The sharp correction came after prices breached the psychologically significant $100 mark, as investors grew increasingly optimistic about the prospects of a diplomatic resolution to the US-Israeli conflict with Iran. Expectations that the outcome of the US midterm elections could intensify political pressure on President Donald Trump to seek a negotiated settlement further weighed on oil prices.

Shares of SpiceJet rose 2% to Rs 7.80 against the previous close of Rs 7.64 on BSE. IndiGo's stock too gained 7% to Rs 5485 on BSE.

The fall in crude oil prices is likely to be positive for India as the country imports over 70% of of its energy needs. Sustained moderation in energy prices could ease pressure on the country's import bill, domestic inflation and current account deficit.

Crude oil prices are closely connected to airline stocks primarily through jet fuel expenses, which are one of the largest operating costs for airlines.

When crude price rises, airline stock prices go downwards as investors price in lower net income. Conversely, when crude oil falls, airline stocks usually rise because operating expenses shrink.