Is The 'Jet' ready for a new 'Take Off'??

20th June 2019, marks an event which could be least expected even in a market as treacherous as the Indian Stock Market. Within the first 30 minutes of the market opening, Jet Airways was among the top losers for the day; shares of the company nose diving by 18% to its all time low at Rs.27 during the morning session.

Huge debts had overburdened the wings of jet in recent past. The chances of revival looked really slim when all the institutions refused to give any additional loans to the airlines and the government also rebuffed any help. The founder chairman, Naresh Goyal, was also forced to resign in the last week of March in a view to keep the airlines going.

The weak oil and bullish markets had nothing to offer the 'grounded' jet, which had been nonoperational since April, 2019. But the sun was about to shine bright on the oldest airline of India and marked a hope of its revival.

Overall, the dues of the company are over 36,000 crores with almost nothing comparable in the assets column to recover it. Hence, an agglomerate of 36 banks, led by State Bank of India from the front, wanting to initiate insolvency proceedings against Jet took them before India’s bankruptcy court NCLT to recover dues of over Eight thousand crores.

National Company Law Tribunal (NCLT) was only going to give the verdict of accepting or not accepting the plea at 5 pm in the evening, but it rose the hopes of many as well as fright among those who had taken a 'short/sell' position in the shares. As the news spread in the second half of the day regarding the verdict, shares started changing hands rapidly, rallying the price by 122% and ending the day at Rs. 62.85(NSE- up by almost 90% for the day). This shows clearly that markets do not just follow the technicals and financials but also information and the emotion generated by it.

5-minute 1 day chart for the Jet Airways (india) Ltd. This chart is taken from chartink.com

NCLT has accepted the plea and Jet's assets will now be under the control of a committee which shall give its first report in the first week of July. The organisation aims to end the issue within 3 months.

It is discouraging to see 2 big airlines of India fail so miserably (Kingfisher in 2012). Jet had been posting losses quarter after quarter and yet the management failed to learn from their competitors. Since the marring of the image of this airlines, its competitors like interglobe aviation (Indigo) and spicejet have only seen an uptrend.

Despite today's boom, which most think can be extended, I think one should avoid such a stock whose movement is so much information sensitive. The financials are obviously weak and if one has money to invest, one should invest in better options to avoid major losses. No one can predict the market with full accuracy, but the risk to reward ratio is not in favor for any further entry in the buy position. There is no final word on whether the company will survive or not, but it is evident that it is not in a good shape at all.

*Disclaimer - I am no certified adviser for stock markets. I am an independent investor and I write this blog to just share my views and opinions and not to persuade anyone to go by what I say. No one can hold me responsible for their undertakings and losses. ** The pictures are taken from the internet.