Auto sector stocks took a significant hit on Thursday after Bajaj Auto reported a lackluster second-quarter profit and slashed its growth outlook for two-wheeler sales in India. The company revised its sales growth forecast from the earlier estimate of 5-8% down to just 5%, citing challenges in the domestic market. This news sent Bajaj Auto shares tumbling by 13.11% on the NSE, closing at ₹10,093.50, significantly impacting the Nifty-50 index’s performance.
The sharp fall in Bajaj Auto dragged the entire auto sector down. The Nifty-50 index closed at 24,749.85, down by 221.45 points, or 0.89%, while the Sensex, where Bajaj Auto is not a constituent, fell by 0.61%, closing at 81,006.61. Market-wide, the broader indices also saw declines, with all sectoral indices in the red, except for Nifty IT.
Investors faced substantial losses as the overall market capitalization of the BSE dropped by over ₹26.03 lakh crore, bringing it down to ₹2457.25 lakh crore. The Nifty Auto index alone fell by 3.54%, as major two-wheeler manufacturers saw their stocks decline sharply. Hero MotoCorp dropped by 3.39%, TVS Motor by 3.43%, Ola Electric by 1.82%, and Eicher Motors by 0.99%.
Bajaj Auto’s decline also had a cascading effect on other auto giants like Maruti Suzuki (-2.23%), Mahindra & Mahindra (-3.52%), Tata Motors (-1.45%), and Ashok Leyland (-2.17%). Auto component manufacturers weren’t spared either, with companies like Balkrishna Industries (-1.90%), Motherson (-1.76%), Bosch (-4.58%), Apollo Tyres (-2.72%), and Exide Industries (-3.08%) experiencing significant losses.
According to Prashanth Tapse, Senior VP of Research at Mehta Equities, “Markets continued their downward trajectory despite firm US and European cues, as foreign fund selling coupled with a sharp fall in automobile stocks led to profit-taking. Expensive valuations are still a concern, and sectors like banking, realty, metals, and telecom also attracted significant selling pressure.”
Aditya Gaggar, Director at Progressive Shares, commented on the market movement, saying, “After a muted opening, auto stocks dragged the index lower, and in the second half, another round of selling pulled the index further down.”
The combined effect of Bajaj Auto’s performance and weakness in other auto-related stocks has dented investor sentiment in the sector, leading to significant market corrections and a cautious outlook for the upcoming sessions.
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