Nifty Auto Plummets After JP Morgan Highlights Trouble Following Trump Tariffs

The Nifty Auto index plunged over 6% on Monday, led by a sharp decline in Bharat Forge shares, which fell by 10%. The sell-off was triggered by JP Morgan's report highlighting potential trouble for the sector following the imposition of new tariffs by the US.

Bharat Forge emerged as the worst-performing stock in the sector, falling to Rs 923.45, down 10%. Other major decliners included Tata Motors, which dropped 9.5% to Rs 555.55, and Samvardhana Motherson International, which fell 9.82% to Rs 107.25. Exide and TVS Motor also saw significant declines, falling 9.99% and 9.89%, respectively.

The broader Nifty Auto index reflected the sector-wide impact, with Bajaj Auto down 7.75%, Hero MotoCorp down 8.61%, and Apollo Tyres down 8.08%. Bosch, M&M, MRF, Maruti Suzuki, and Ashok Leyland also posted notable losses, contributing to the overall decline.

JP Morgan's report highlighted the potential earnings impact on Indian auto suppliers following the recent imposition of a 25% tariff on automobiles and parts by the US, along with a 26% reciprocal tariff on India. The brokerage noted that the earnings impact for suppliers could range between 5% and 30%, depending on how the tariffs are absorbed by original equipment manufacturers (OEMs), suppliers, and consumers.

The report identified Samvardhana Motherson International, Bharat Forge, and Sona Comstar as the most affected under JP Morgan's coverage. Motherson is expected to be relatively less impacted due to its local presence in multiple geographies, while Bharat Forge and Sona Comstar, which primarily export to the US from India, could face more significant challenges.

JP Morgan emphasised that the main risk lies in lower US demand if tariffs become the new normal. The brokerage expects OEMs to pass on a greater share of the costs to consumers, potentially leading to structurally lower US vehicle demand. Indian suppliers, however, have strong balance sheets and should be able to mitigate the impact through capacity investments and acquisitions of smaller suppliers over time.