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Auto stocks accelerate on rate cut hopes

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Capital Market
Last Updated : May 15 2013 | 3:00 PM IST

Mahindra & Mahindra (up 3.61% at Rs 984.75), Tata Motors (up 2.76% at Rs 308.80), Bajaj Auto (up 2.62% at Rs 1,830.35), Maruti Suzuki India (up 2.31% at Rs 1,743), Ashok Leyland (up 1.58% at Rs 22.55) and Hero MotoCorp (up 2.38% at Rs 1,712.05) edged higher.

The S&P BSE Auto index was up 277.10 points or 2.52% at 11,292.30. It outperformed the Sensex which was up 401.64 points or 2.04% at 20,123.93.

The Auto index had outperformed market over the past one month till 14 May 2013, surging 11.03% compared with the Sensex's 8.11% rally. The index had also outperformed the market in past one quarter, gaining 2.09% as against Sensex's 1.15% rise.

Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

Reserve Bank of India Governor D Subbarao on Tuesday, 14 May 2013, said that the central bank will take note of falling inflation when discussing potential interest rate cuts.

Shares of Maruti Suzuki India were also boosted by yen's slide against the dollar. The stock hit record high of Rs 1,756 in intraday trade today, 15 May 2013. Weak yen could boost earnings of Maruti Suzuki as it imports raw materials from its Japanese parent Suzuki Motor Corporation. It also pays annual royalty on sales to the Japanese parent.

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First Published: May 15 2013 | 1:20 PM IST

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