'Too high, too fast': Jet Airways shares fall

What's Down: Jet Airways, India's biggest listed carrier, dropped the most in more than a month as some investors judged recent gains were excessive amid a possible deal with Etihad Airways.

Jet Airways may raise about 16 billion rupees if it sells a 24 per cent stake to Etihad Airways, an Indian government official said. Punit Paranjpe / Reuters

Jet Airways, India's biggest listed carrier, dropped the most in more than a month as some investors judged recent gains were excessive amid a possible deal with Etihad Airways.

The stock sank 4.6 per cent to 529.25 rupees at the close in Mumbai, the steepest decline since October 30, after earlier jumping as much as 7.1 per cent.

Jet Airways surged 57 per cent in November, the biggest monthly advance since listing in March 2005.

The rally pushed the stock's 14-day relative strength index to 83.4 on November 26, a nine-month high. The gauge of how rapidly prices rose or fell in the period has stayed above 70 in the past six days, a level some traders use as a signal to sell.

"The stock has moved too high, too fast without any certainty of a deal," Jitendra Panda, the head of institutional sales at Future Capital Holdings in Mumbai.

"Investors have tried to book profits before valuation and terms of the deal emerge."

Jet may raise about 16 billion rupees selling a 24 per cent stake to Etihad, said an Indian government official, who asked not to be identified.

Jet may seek regulatory approval and the deal could conclude by the end of the month, the official said yesterday.

The Etihad chief executive James Hogan said yesterday that the carrier was "continually looking" for long-term prospects and bringing them before the board, with India and China being key regions of focus.

The airline was in due diligence with a "couple" of Indian carriers, he said, without naming them.

Carriers in Asia's third-largest economy are considering equity alliances with overseas airlines after the prime minister Manmohan Singh in September allowed them to sell as much as 49 per cent to foreign operators.

* Bloomberg News