Nifty Auto in fast lane on optimistic outlook ahead; Tata Motors, Eicher, Maruti, Bosch, Bharat Forge drive the index

Overall, the index saw nearly 2% gains. Except for Tube Investments, all stocks listed on Nifty Auto were on a bull run.

December 22, 2021 12:38 IST | India Infoline News Service
Stock Market Up
Auto stocks are shining on Wednesday as investors pin their hopes on better sales and demand amid Christmas and New Year's celebration despite Omicron spread continuing to hinder markets bullish outlook going forward. The broader markets today were in the fast lane so far with substantial contributions made by the auto sector as well. Investors are also optimistic about the auto industry for 2022 even though semiconductor shortages continue to be a major spoilsport for production and earnings.

The spur in the auto industry is on the expectation for acceleration in sales during the last month of 2021 driven by festivals with automakers offering exclusive benefits on their products for Christmas and New Year's. Also, December will be the last closing month of the third quarter for FY22, and corporate earnings will take centre stage from next month itself which further swayed sentiments. This could cushion the semiconductor shortages impact on production which is expected by many major auto firms in the whole of Q3.

Experts are optimistic about the sector as India's electric vehicle push to drive the industry further. By 2030, the country targets to turn 80% of its scooters and motorbikers while 30% of cars are electric.

The use of electric vehicles is increasing in the country. As per the e-vahan portal (Ministry of Road Transport and Highways), at present there are about 8.77 lakhs active electric vehicles are on Indian roads as of December 08, 2021.

The semiconductor shortages issue is expected to be on a revival path from mid-2022, however, the Omicron surge could further delay the recovery to 2023. India has been taking measures to address the semiconductor issue and strengthen the chip market.

Recently, the government approved the comprehensive program for the development of a sustainable semiconductor and display ecosystem in the country. With an outlay of Rs76,000cr, the Government of India has announced incentives for every part of the supply chain including electronic components, sub-assemblies, and finished goods.

Once the global chip shortage revives, the pent-up demand in the auto industry will take over.

At around 12.26 pm, Nifty Auto was trading at 10,624 up by 140.10 points or 1.34%. The index has touched an intraday high of 10,686.35. Overall, the index saw nearly 2% gains.

On the index, 14 scrips advanced and only one declined. Except for Tube Investments, all stocks listed on Nifty Auto were on a bull run.

Tata Motors was the top bull soaring by 2.85%. Recently, the company signed a Memorandum of Understanding (MoU) with the Government of Maharashtra, through the Industries, Energy and Labour Department, Government of Maharashtra, with an intent to support setting up a Registered Vehicle Scrapping Facility (RVSF) in Maharashtra. The proposed scrappage centre will have the capacity of recycling up to 35,000 vehicles a year for end-of-life passenger and commercial vehicles.

Eicher Motors climbed 2.8%, while Balkrishna surged 2.4%.

Exide Industries jumped 1.7%. The company has decided to set up a multi-gigawatt lithium-ion cell manufacturing plant. Also, Exide plans to apply for and participate in the Production-Linked Incentive Scheme for National Programme on Advanced Chemistry Cell (ACC) battery Storage, issued by the Ministry of Heavy Industries.

Ashok Leyland surged 1.5%, while stocks like Bharat Forge, Bosch, Amara Raja Batteries and Maruti Suzuki climbed more than 1% each. MRF and M&M advanced 0.8% and 0.7%. TVS Motor up 0.5%, while Bajaj Auto and Hero MotoCorp gained marginally.

Tube Investments was the only bear tumbling by nearly 1%. 

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