Nifty auto felt extra pressure with the likes of Hero MotoCorp Ltd., Bajaj Auto Ltd., Mahindra and Mahindra Ltd. among others plunging up to 6% on Wednesday despite posting broadly robust sales tallies a day prior.
Hero Moto fell as low as 6.8% to Rs 5,173, Bajaj Auto, M&M, and TVS Motor Company fell over 3% to indraday lows of Rs 11,925, Rs 3,142.50, Rs 4,064.90, respectively.
Tata Motors, and Tata Motors Passenger Vehicles fell 1.4% and 4% respectively, while Maruti Suzuki and Samvardhana Motherson International traded 1% and 2.4% lower.
The steep selloff comes despite broadly strong August auto sales, and was likely triggered due to a bearish macro sentiment, as per Harshal Dasani, Business Head at INVAsset PMS.
Soaring Crude Unleash Macro Bears
He pointed out factors behind weakness in the auto sector with the immediate one being macro. The markets opened lower today with the Sensex down 472 points and the Nifty near 23,859 on renewed US-Iran escalation and rising crude, with breadth decisively negative.
"Autos take that harder than most because oil sits inside the consumer's running cost, the freight bill and the input basket at once," Dasani stated.
Base Shift For Festive Season
According to Dasani, August's headline growth of 50 to 59% for several manufacturers is measured against a month in 2025 when buyers deliberately stopped purchasing ahead of the GST cut, and September's comparison flips against the GST bonanza month.
Shadow Over Margins
The demand created by a tax cut arrived as a price reduction passed to the customer, so realisation carries the cost of the volume, the market expert underlined.
"My caution on the sector has never been about demand, which is holding. It is that volume growth is being asked to do the work on a base that is about to turn hostile and an input curve that is rising," Dasani added.
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