Jet Airways share price climbs 10% more, over 140% rally in last three trading sessions; know why

Cash-strapped domestic airlines, Jet Airways share price surged 10% on Monday's intraday trading session, carrying forward the extended rally of previous three trading days. The shares of the debt-laden firm are witnessing a buying trend with over 140% price hike in last three days. The shares opened at a day high of Rs 80 on Monday on BSE, despite hitting the all time low of Rs 27 on Thursday. There are few factors that are triggering the activity in Jet Airways share price on Dalal Street. 

Jet Airways was dragged to National Company Law Tribunal (NCLT) over its default payment case and proceedings for the same have already started. While the insolvency case still awaits the revival or recovery of millions of debt pending with the company. The airline owes Rs 8,500 crore in total to banks and around Rs 25,000 crore in arrears to vendors, lessors and employees.

Research Head, Joindre Capital Services, Avinash Gorakshakar told Zee Business Online, ''The domestic market is heading towards the F&O expiry on June 27th for the month and investors are short covering their contracts. The company has already shut down its business and is dragged to NCLT by SBI, no investor would be keen to buy equity in current scenario. The cash market is witnessing an upward trend due to short covering in F&O contracts and after June 27, the share may get tumbled again, while the volatility till expiry is still expected.''

Jet Airways is the first domestic airliner to go into bankruptcy after the Mumbai bench of the NCLT admitted an insolvency petition filed by SBI on behalf of 26 lenders on June 20th. While some analysts on the street also state the reason for a rally as it comes ahead of the order from National Company Law Tribunal (NCLT) on insolvency plea filed by State Bank of India (SBI), last week. The engineers’ and pilots’ associations also moved the tribunal seeking to be made parties to the ongoing insolvency matter. 

The airline said in a filing to the Bombay Stock Exchange on June 23, "The National Company Law Tribunal, Mumbai Bench, Corporate Insolvency Resolution Process (CIRP) has been initiated for Jet Airways (India) Limited as per the provisions of the Insolvency and Bankruptcy Code, 2016.''

''The continuous rally in the share price is barely heavy trading going on, with no or very fewer deliveries in the cash market. No institution would be investing in the share right now, which clearly states the condition of the company. The investors should stay away from the stock, as there is no scope of any opportunity at present,'' Gorakshakar added. 

Jet Airways share price was trading at Rs 75.30 on BSE, with 3.73% hike at 1400 hrs on Monday. While, there also some hopes that the NCLT will order some relief to the troubled Jet Airways and its lenders, but experts are clearly suggesting to avoid investing in the stock of Jet Airways, under current circumstances.