Shares of airlines and hotels rose dramatically on Monday after India and Pakistan stated on Saturday that they had reached an agreement to halt all firings and military actions on land, air, and sea beginning at 5 pm that day.
The market reacted warmly to the news in today’s trading session, following days of hostility between the two countries.
The decision comes after India launched ‘Operation Sindoor’ on 7 May to target terror infrastructure in Pakistan and Pakistan-occupied Kashmir in response to the Pahalgam terrorist attack.
Investor sentiment was boosted further on 12 May when the government allowed operations to resume at 32 airports, including those in Jammu & Kashmir and Punjab, which had been temporarily closed due to the military war with Pakistan. The Notice to Airmen (NOTAM) comes two days after the two sides agreed to halt military operations.
InterGlobe Aviation Ltd, the parent firm of India’s largest airline IndiGo, saw its shares rise 9.72% to an intraday high of Rs 5,597 on the NSE. The market began up 6.28%, snapping a four-day losing streak fueled by international fears.
SpiceJet shares also rose, rising 10.44% intraday to Rs 47.69. The stock opened up roughly 7%.
The rally reflects hopes for greater travel and tourism activity as a result of the de-escalation, with the aviation and hotel sectors expected to benefit most.
Hotel stocks reflected the optimistic atmosphere. Indian Hotels Company Ltd, which owns the Taj chain, rose 8.38% to a high of Rs 779 after starting 6% higher.
ITC Hotels shares surged 8.5% to Rs 198.50, while Lemon Tree Hotels rose more than 6% to Rs 137.64. Chalet Hotels and EIH Ltd rose to 7% in intraday trading.
The equity indexes also rallied dramatically on Monday, with the Sensex up over 2,300 points and the Nifty rising beyond 24,700, as lessening geopolitical tensions between India and Pakistan and optimistic US-China trade talks bolstered investor sentiment. This is the largest single-day increase in the past 11 months.
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