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Auto stocks seem to have taken on their stride the decision of the Centre not to extend the excise duty sops to the auto sector from January 1.
While a few auto stocks in the NSE auto index ceded some ground in the morning trade, the impact was not significant as feared.
Tax concession
While the auto industry has been pressing for continuation of the relief for some more time, the Government has chosen to end the tax concession apparently to shore up its finances.
Moreover, while the Government was offering duty concession to provide some relief to the industry, some of the auto players were also offering discounts to buyers in view of the sluggishness in demand due to the overall economic scenario with high inflation keeping the lending rates high.
But with inflation cooling off, the expectation is that a rate cut is round the corner that would cushion any impact of removal of the duty concession.
Reflecting the investors' mood to shrug off the impact of the Government decision, the auto stocks were trading with only marginal losses except Eicher Motors that shed Rs 158.20 to trade at Rs 15,194.65. But in percentage terms, the loss in its share price is negligible since it is a high value stock.
Bosche was another high value stock to shed some value, down by Rs 64.35 to Rs 19,599.95. But other auto majors did not see significant erosion in value. M&M slipped by Rs 21.75 to Rs 1,236 and Maruti lost Rs 18.25 to trade at Rs 3,329. Bajaj Auto was trading at Rs 2,436.50, a loss of Rs 18.25. Hero MotoCorp was down marginally by Rs 5.80 at Rs 3,079.05 and Tata Motors declined by 75 paise to Rs 493.
Five of the NSE auto index stocks were trading in the green. Bharat Forge was up by Rs 9.40 at Rs 946.40 and Motherson Sumi moved up by Rs 13.35 to Rs 458.65. Tyre maker MRF was up by Rs 109.20 to Rs 38,033. Apollo Tyres and Amtek Auto were also up.
The NSE auto index was down by about 31 points a little over an hour into the day's trading.
The CNX auto index had rallied by 56.65 per cent during the last one year with all the 15 stocks in the index gaining in value. While seven of the stocks have appreciated in triple digits in terms of percentage with Eicher Motors gaining 205.43 per cent to be at the top of the gainers, the other eight auto index stocks had made double-digit gains in percentage terms in the past one year, leaving any minor price correction not making significant impact on the stock prices.
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