Wipro replaces Bajaj Auto in the Sensex; two-wheeler major skids 5%

Shares of Bajaj Auto dipped 5 per cent to hit a fresh 52-week low of Rs 3,028 on the BSE in Monday’s intra-day trade. The two-wheeler (2W) company was out from the 30-share S&P BSE Sensex with effect from today. The information technology (IT) company Wipro replaced Bajaj Auto in the 30-share benchmark index.

Shares of Bajaj Auto fell below its previous low Rs 3,149.90 hit on Friday, December 17, 2021. In past one month, Bajaj Auto has underperformed the market by 15 per cent, as compared to 7.3 per cent decline in the S&P BSE Sensex. In comparison, Wipro was up nearly 1 per cent during the same period.

“IT major Wipro will replace two-wheeler major Bajaj Auto in the 30-share Sensex,” BSE’s index construction arm Asia Index announced on November 18, 2021. IIFL Alternative Research estimates Wipro to see passive inflows of $166 million and Bajaj Auto to see outflows of $80 million on account of the rebalancing.

Meanwhile, the Supreme Court last week dismissed a plea by Bajaj Auto against AAP government's decision to issue 4,261 new permits only to e-autos, saying Delhi residents are badly affected by air pollution, a part of which is contributed by vehicles.

A bench headed by Justice L Nageswara Rao said the advertisement issued by the Delhi government inviting applications for e-autorickshaws cannot be said to be arbitrary as it is in conformity with FAME-II scheme and the Electric Vehicle policy 2020, the Press Trust of India (PTI) reported. CLICK HERE FOR FULL REPORT

Analysts at IDBI Capital expect domestic 2W market to remain soft in Q3FY22 and likely post recovery during Q4FY22 while export market continues to show improvement for Bajaj Auto. The Company is anticipated to face margin pressure during Q3FY22, due to high raw material prices.

The semiconductor shortages impacted the company’s 20 per cent of premium bike portfolio. The raw material inflation also impacted the margins. As per the management, once the industry overcomes the chips crisis the demand for metals is expected to come back swiftly which will lead to higher prices. Further the margins are expected to remain under pressure with no further prediction of outcome from the management beyond Q3FY22, the brokerage firm had said in its Q2FY22 result review note.