Shares of India's two largest multiplex operators PVR Ltd and Inox Leisure Ltd surged in morning trading on Thursday, after the government said it would allow states to reopen movie theatres at half their capacity from October 15 after remaining shut for six months.
PVR's shares rose as much as 15 per cent to 1395.15 rupees, while Inox surged 17.6 per cent to 318 rupees, pushing the Nifty media index up 4.3 per cent.
About 9,500 theatres have remained shut since the nationwide coronavirus lockdown started in late March. Movie industry representatives in Bollywood have said it would take at least two years for them to recover financially from the pandemic, putting tens of thousands of jobs at risk.
Industry executives and analysts said the move to reopen would help tap pent-up demand, especially as India heads towards a busy festive season, which culminates with Diwali.
"Pent-up demand will kick in as more movies release Diwali onwards", said Keshav Lahoti, equity analyst at Angel Broking.
Many big-budget Bollywood movies have been getting pushed to the next fiscal year, as falling box-office collections made production houses face a liquidity crunch. Streaming services such as Netflix Inc and Amazon Prime have stepped up releases of original shows and movies.
"As the situation improves and with the festive season upon us, we are confident that films will return to the big screen," said Ashish Saksena, a senior executive at ticket booking site BookMyShow.
The federal government's announcement comes just days after the state of West Bengal said it would allow cinema halls and open-air theatres to operate in the state from Oct. 1 with a limited number of participants.
PVR's shares were trading up 9.3 per cent, while those of Inox were up 7.5 per cent at 0556 GMT. Movie distributor UFO Moviez India Ltd's shares rose 6.6 per cent to 80 rupees.