IndiGo, SpiceJet nosedive 6%: Will rising crude and Israel-Iran conflict trigger more pressure on aviation stocks?

Israel- Iran Conflict: Shares of aviation companies, especially InterGlobe Aviation (IndiGo) and SpiceJet, nosedived on Friday, June 13, as a perfect storm of negative catalysts triggered a sector-wide sell-off. IndiGo plunged nearly 6 per cent to hit an intraday low of Rs 5,175, while SpiceJet slipped nearly 2 per cent to Rs 42.16.

The sharp decline came as Israel launched a pre-emptive strike on Iranian nuclear and military facilities, prompting fears of further escalation in the Middle East, a region critical for global aviation and oil supply.

The immediate fallout: Brent crude futures surged over 13 per cent in intraday trade, severely impacting airline cost structures. Fuel typically accounts for 30- 40 per cent of operational costs for airlines like IndiGo and SpiceJet.

Air India tragedy adds to aviation woes

Market sentiment turned even more bearish following the crash of an Air India Boeing 787-8 Dreamliner aircraft (Flight AI171) en route to London. The aircraft crashed shortly after takeoff from Ahmedabad, reportedly hitting a doctors’ hostel and claiming over 240 lives.

Though the crash did not involve IndiGo or SpiceJet, aviation stocks globally saw pressure. Boeing shares plunged 5 per cent on the NYSE overnight. IndiGo, which has placed a significant aircraft order with Boeing, faced a rub-off effect as investor confidence in airline safety and demand weakened.

The Aircraft Accident Investigation Bureau (AAIB) has launched a formal probe, and Boeing’s Dreamliner programme is under renewed scrutiny after past quality-control issues.

Brokerages remain bullish

Despite Friday’s correction, analysts remain upbeat on the long-term prospects of InterGlobe Aviation. Domestic brokerage firms have retained their ‘buy’ calls. HSBC Global raised its target price to Rs 6,650 from Rs 5,975, while another domestic brokerage maintained a bullish view with a target of Rs 6,700, implying nearly 30 per cent upside from current levels.

Analysts believe crude prices may stabilise once tensions ease and that strong domestic air travel demand and IndiGo’s aggressive fleet expansion plan will drive long-term value creation.

However, any sustained dip in these stocks may offer accumulation opportunities for long-term investors, especially in structurally strong players like IndiGo.