Bumpy ride: Automakers hit reverse gear, BSE Telecom index down 2.9%January 30, 2021
Automakers were among the top losers on the bourses on Friday.
The BSE Auto Index declined 2.95 per cent on Friday, and was the biggest sectoral loser with the exception of telecom operators.
The BSE Telecom index was down 2.97 per cent.
In comparison, the benchmark Sensex closed the session with losses of 1.26 per cent. This was the worst show by the auto index in the last three months.
Friday’s sharp correction breaks the momentum in the auto index, which had been one of the rally leaders since the March 2020 lows.
The auto index has more than doubled since March 23, 2020, against a 78 per cent rally in the Sensex during the period.
The country’s largest carmaker Maruti Suzuki was, however, the biggest index loser and saw a 5 per cent decline in its share price on the NSE on Friday.
This was the worst show by Maruti Suzuki since April 3 last year, when its share price declined by 5.5 per cent.
The decline in Maruti’s share price came after company reported lower-than-expected revenues and net profit in its results for the December 2020 quarter.
Auto analysts also raised concerns about a decline in the company’s operating margins on account of rising metal and other commodity prices.
The country’s top two-wheeler maker Hero MotoCorp was another big loser, and declined by 4 per cent on Friday.
Bajaj Auto also underperformed the broader market and closed the day down 2.7 per cent.
The auto sector is a big barometer of discretionary consumer demand in the country, and some investors fear an adverse impact demand for passenger cars if the forthcoming Union Budget announces a hike in taxes to fund the country’s growing fiscal deficit.