Big-ticket auto stocks were back in focus after RBI Governor D. Subbarao said inflation might start softening from the fourth quarter, raising hopes of interest rate cuts.

While Maruti Suzuki shares hit a fresh 52-week high, M&M made significant gains in morning trade.

That three of the 10 top gainers on the NSE were from the auto pack lent credence to investors’ hopes. However, the two-wheeler stocks were relatively subdued with some of them even making small losses.

The RBI Governor, who had steadfastly stuck to a high interest rate regime as a tool to combat inflation, had stated yesterday in Kolkata that he expected “inflation to trend down commencing from the fourth quarter of the current fiscal (Jan-March 2013 )”. He had said during the media interaction that the RBI would decide on its monetary policy after taking into account the growth-inflation trajectory.

The market seems to have interpreted this as a signal that the RBI may revisit the interest rates since the RBI Governor had earlier used high interest rate in his battle to tame inflation.

Maruti was the star performer on the NSE, hitting a fresh 52-week high of Rs 1,539.90 before easing to Rs 1,527.40, a gain of Rs 44.85. The trading volume stood at 6.65 lakh shares. M&M gained Rs 16.20 to trade at Rs 945.05 with a trading volume of 5.55 lakh shares. The stock is nearing its earlier yearly high of Rs 965.50.

Tata Motors was trading up Rs 5.10 at Rs 285.95 with a surge in trading volume to 63.97 lakh shares.

However, the other auto stocks saw a more subdued response from the investors that limited their gains or led to marginal losses. TVS Motor was trading at Rs 39.50, a gain of just 15 paise. Ashok Leyland was down by 15 paise at Rs 28.05, Bajaj Auto lost Rs 3.65 to trade at Rs 1,946 and Hero MotoCorp shed Rs 1.55 to trade at Rs 1,823.65.

(This article was published on December 7, 2012)
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