Nifty Auto partially recovers previous day's steep losses of 3.5%; Eicher Motors, Tata Motors, TVS Motor up between 1-3%

After a weak opening, Indian indices strengthened led by gains in heavyweight stocks. And amid such a recovery, Nifty Auto which posted steep losses in the previous day's session also saw partial recovery. At the last count, Nifty Auto was up 0.83 per cent.

Within the pack, of the 15 stocks constituting the index, only 2 stocks traded in the red, including Bajaj Auto and Maruti Suzuki.

While the top performers included stocks like Eicher Motors, Tata Motors, TVS Motor and Ashok Leyland which rallied between 1-3.4 per cent.

Amar Nandu, Research Analyst, SAMCO Securities attributed the sharp plunge in Nifty Auto by 3.54 per cent on Thursday to Bajaj Auto's steep decline of over 13 per cent. He sai, "Although all the constituent stocks in
the index declined, the drop was largely driven by the 13.11 per cent slump in Bajaj Auto’s share price, following its reporting of a significant fall in consolidated Q2 earnings, which disappointed market expectations."

Major auto OEM stocks have been trending downward since the last trading session of September, as the festive seasons of Ganesh Chaturthi and Onam in September failed to generate the expected retail demand, he  added.

According to FADA's September 2024 report, retail sales volumes fell YoY by 8.51% for two-wheelers, 18.81 per cent for passenger vehicles, and 10.45 per cent for commercial vehicles, reflecting the industry's weak current outlook. The report also highlighted a record-high inventory level of 80-85 days with PV dealers, valued at Rs 79,000 crore, raising serious concerns over OEMs' sales in the coming months. Amid these factors, the dip in Bajaj Auto’s Q2 results further dampened market sentiment across the sector, leading to a decline in most auto stocks today.

Despite Bajaj Auto achieving the highest YoY sales volume growth in Q2 in the two-wheeler and commercial vehicle segments among all OEMs, it reported only 0.84 per cent Q-o-Q and 9.20 per cent YoY net profit growth in its standalone results.

Nandu added as other auto OEMs are yet to release their Q2 FY25 earnings, the market seems to have priced in slower growth and a more challenging demand environment ahead for auto stocks.