Nifty Auto Hits Lowest In A Month Low As Rate Cut Hopes Wane
The NSE Nifty Auto fell 2.18% to hit a month low of 20,066.80 as of 12:12 p.m.
Most auto stocks declined on Friday, tracking overall losses in domestic markets as back-to-back stronger than expected inflation report from the US belied hope of a sooner rate cut.
The rate sensitive NSE Nifty Auto fell 2.18% to hit a month low of 20,066.80 so far on Friday. The index traded 413.75 points, or 2.02%, lower at 20,100.50 as of 12:12 p.m.
Underlying US inflation topped forecasts for a second month in February, reinforcing the Federal Reserve’s cautious approach to cutting interest rates, according to Bloomberg.
This pushed the benchmark 10-year U.S. Treasury yield to over two week high of 4.29%, U.S. Department of Treasury's website showed.
Additionally, the dollar index rose to over one-week high of 103.40 on Tuesday.
This in turn made riskier assets like emerging market securities less attractive to investors. Losses in Asian equity market also weighed on Indian markets.
The NSE Nifty Index declined 0.96% to hit a intraday low of 21,934.10. It was trading 201.50 points, or 0.91%, lower at 21,945.15 as of 12:12 p.m.
Adding to this, Macquarie said low EV subsidies under new Electric Mobility Promotion Scheme 2024 are negative for TVS Motor Ltd., and Bajaj Auto Ltd.
Shares of Bajaj Auto was the third top loser among auto stocks and the NSE Nifty Auto index.
TVS Motors stood second loser among its peers, and fifth dragger in Nifty Auto index.
Ministry of Heavy Industries has introduced a new scheme to promote e-mobility with an outlay of Rs 500 crore for four months. The scheme will begin from April 2024.
However, Macquarie said the lower subsidies needs to be seen in the bacdrop of the Auto PLI scheme effective from FY25, and, softening global EV cell prices.
The new scheme would impact E2W pricing by around Rs 7,000-10,000 per unit and Rs 35-45,000 per unit impact on E3W pricing.