The Nifty Auto index is above key levels and has crossed the 200 day moving average (DMA). The index is up 15% from recent lows it hit amid the West Asia tensions.
Why the sharp move
Crude is at pre-war levels, causing concerns related to demand to go away.
Metal prices are sharply lower. Commodity cost was one of the major concerns. Most companies announced price hike to offset the impact. The sustained lower price will aid margin.
Improvement in supply chain issues. The auto industry faced issues related to exports in the last two three months. Companies such as Ashok Leyland, Uno Minda had raised the issue.
Retail demand remains strong.
The June VAHAN registration data indicates that strong demand has continued. Total registrations have increased 23% this month, so far. Passenger vehicles have witnessed growth of around 30%, while two-weekelrs have seen more than 20%.
Strong auto demand is positive for auto ancillaries as well.
Stocks and the move
Auto stocks have been major underperformers in 2026. Maruti Suzuki, M&M shares are still down 15-17% this year, so far. Two-wheelers have outperformed four-wheelers in 2026, so far.
Among two-wheelers, Eicher Motors and Bajaj Auto outperformed Hero MotoCorp and TVS Motor.
Bharat Forge and Sona BLW are the biggest outperformers among auto ancillaries.
The Nifty Auto index is up 3% around 2.10 pm on Wednesday. Samvardhana Motherson, M&M, TVS Motor, Maruti Suzuki, Ashok Leyland are the top gainers in the index trading 4-6.6% higher. Barring Tube Industries and Exide Industries, the remaining 13 stocks in the index are trading with gains.
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