Why India's auto stocks are falling for fifth straight day?
What's the story
Shares of Indian automakers and auto-parts makers have witnessed a decline, marking the fifth consecutive session of losses. The Nifty Auto index has also fallen some 0.7% to 27,817. However, analysts remain optimistic about the sector's future performance and suggest potential investment strategies amid this phase of consolidation.
Market performance
Top auto losers and gainers in the market
Among the top losers on the Nifty Auto index are Tube Investments of India, Exide Industries, Uno Minda, Maruti Suzuki, Mahindra & Mahindra (M&M), and TVS Motor Company. Their shares have fallen over 1% each. Companies like Tata Motors Passenger Vehicles and Hero MotoCorp have seen a nearly 1% decline in their share prices.
Analyst insights
Analysts view recent auto stock decline as profit booking
Siddharth Maurya, founder & MD at Vibhavangal Anukulakara, believes the recent fall in auto stocks is more about near-term profit booking and demand concerns than a structural breakdown of the sector. Harshal Dasani from INVasset PMS echoed this sentiment, saying that "the medium-term outlook for the auto sector remains constructive," backed by several policy and demand tailwinds.
Market trends
Nifty Auto index has surged nearly 40% since March 2025
Tushar Badjate, director of Badjate Stock & Shares, observed that the Nifty Auto index has surged nearly 40% from a past low of 19,300 to the current level. He said this shows a lot of optimism is already priced in and the recent correction is more about valuation rationalization than demand stress.
Market forecast
Future stability of auto stocks depends on demand indicators
Maurya said the future stability of auto stocks would depend on a rebound in demand indicators, stability in macros, and clarity in policies. He warned that until clear triggers on consumer demand or sector-specific catalysts emerge, volatility and range-bound action are likely to continue in the near term.
Demand boost
GST rationalization, interest rate cuts may boost vehicle demand
Dasani said potential GST rationalization on automobiles, expected interest rate cuts, and income tax relief to increase disposable income could significantly boost vehicle demand across segments. He added that lower financing costs usually have a direct and visible impact on auto sales, especially in passenger vehicles and two-wheelers.
Tariff impact
Proposed US tariff unlikely to affect Indian auto manufacturers
Dasani also downplayed concerns over the proposed 500% US tariff, saying it is unlikely to have a major impact on Indian auto manufacturers as India's direct auto exports to the US are limited. He said any potential impact would be felt more by select auto ancillary players supplying components to global OEMs than domestic automakers themselves.