Tourism stocks IndiGo, Indian Hotels, Lemon Tree soar after India, Pakistan pause military action

Shares of tourism-linked stocks, be it from aviation or hotels or travel ticket-booking-linked stocks, surged up to 7% on Monday, May 12, after India-Pakistan paused military action on the border over the weekend.

The Nifty India Tourism Index has gained as much as 4% on Monday, with all of its constituents trading with gains.

Shares of India's largest airline, InterGlobe Aviation, are up over 6.5%, while those of Lemon Tree Hotels, Indian Hotels, IRCTC, GMR Airports, are trading with gains between 3.5% to 5.5%.

Even shares of ticket booking platforms like EasyTrip Planners, IxiGo and IRCTC are trading between 3.5% to 5% higher.

Most of these tourism-linked stocks, including IndiGo, were impacted as tensions between India and Pakistan rose on the border with airports from Dharamshala to Leh and Srinagar being closed.

According to brokerage firm B&K Securities, nearly 430 flights were cancelled by aviation companies during this period.

These stocks further received a boost after the Notice to Airman (NOTAM) for the closure of 32 airports is being cancelled on instructions from the Indian Air Force. These airports, mostly located close to the India-Pakistan border, were shut for a better part of last week as tensions between the two countries had escalated.

Airport officials have told CNBC-TV18 that a new NOTAM will be issued for the opening of these 32 airports. However, airlines may take time to resume flights as passengers have to be informed in advance.

Shares of Indian Hotels had declined 10% last week, while those of IndiGo and IRCTC were down between 3.5% to 4.5% in the week gone by. While the latter have recovered nearly all of their losses, Indian Hotels is still below last week's levels.