Shares of automobile and related companies faced pressure as the National Stock Exchange (NSE) Auto index fell over 2% due to profit booking following July sales numbers. Tata Motors, Eicher Motors, and Maruti Suzuki India experienced declines ranging from 3% to 5%. Mahindra & Mahindra (M&M), Hero MotoCorp, TVS Motor Company, and Bajaj Auto dropped between 1% and 2%. Cummins India and Apollo Tyres slipped 9% and 3%, respectively, in intra-day trading on Friday.
At 12:02 PM, the Nifty Auto index, the top loser among sectoral indices, was down 2.3%, compared to a 0.9% decline in the Nifty 50. Despite today’s drop, the Auto index has outperformed the market so far in 2024, surging 38% against a 14% rally in the benchmark index. Over the past year, the Nifty Auto index has zoomed 65%, compared to a 27% increase in the Nifty 50.
Overall, wholesale volume performance was subdued in July 2024, with some segments like passenger vehicles (PV), commercial vehicles (CV), and select two-wheeler players reporting weak sales volumes. Domestic passenger vehicle industry volumes are expected to have declined year-on-year (YoY) due to inventory corrections amid weak demand trends. The domestic two-wheeler wholesale segment volumes are expected to have grown in high single digits YoY, though performance was mixed with a few players reporting volume declines YoY, according to Kotak Securities.
With the Nifty Auto index’s valuation rising above the 10-year mean, overlooking volume trends and commodity cost increases, the brokerage firm InCred Equities retains a Neutral rating on the auto sector.