Auto stocks fall ahead of September sales numbers

Indian auto stocks got a bear hug with the Auto index plunging nearly 14.8 per cent in September from its high to low. Auto sales numbers in August were a mixed bag where Maruti Suzuki, Hero Motocorp, TVS and Escorts posted below expected results, while Tata Motors and M&M were in line and Ashok Leyland beat expectations. Kerala catastrophe and postponed festive season were the catalysts.

Today Nifty Auto index was the third top sectoral loser on the last trading day of September and fell 2.3 per cent. Friday’s move was ahead of the auto sales number for September which is expected to release in the next week. Two/Three wheeler segment stocks fell more sharply than other segments ahead of moderate or weak growth expected in September.

Going ahead, the next two months would be keenly watched on the back of festive sales during Dashera and Diwali where sales are expected to bounce back. However, below normal monsoon in the major market areas might result in a drop in auto sales with a drop in the rural incomes.

Nifty Auto index gave a Symmetric Triangle pattern breakdown near 10,680 levels on September 18 and thereby fell sharply after that. Volumes are supporting a downturn and oscillators are yet to signal any bounce back in the index.