Five auto stocks rose by 0.01% to 3.1% at 10:35 IST on BSE on hopes of rate cut by the central bank after latest data showed growth of industrial output improved to 2.5% in September 2014 and consumer inflation eased to 5.52% in October 2014.
Meanwhile, the S&P BSE Sensex was down -96.37 points or -0.34% at 27,912.53.
Ashok Leyland (up 3.1%), Bajaj Auto (up 0.16%), TVS Motor Company (up 0.98%) and Maruti Suzuki India (up 0.28%) gained.
Eicher Motors rose 0.01%. Eicher Motors' consolidated net profit rose 53.61% to Rs 165.03 crore on 30.99% rise in total income to Rs 2294.16 crore in Q2 September 2014 over Q2 September 2013. The result was announced after market hours on Wednesday, 12 November 2014.
Tata Motors (down 0.91%), Mahindra & Mahindra (M&M) (down 0.26%), and Hero MotoCorp (down 0.51%), declined.
The BSE Auto index had outperformed the market over the past one month till 12 November 2014, rising 7.32% compared with the Sensex's 6.51% rise. The scrip had also outperformed the market in past one quarter, gaining 14.62% as against Sensex's 8.22% rise.
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The recent cut in fuel prices in line with slide in crude oil prices and hopes of policy rate cut by the central bank caused buying interest in auto stocks.
India's Index of industrial production (IIP) growth improved to 2.5% in September 2014 compared with 0.5% (revised) increase in August 2014, data released by the government after trading hours yesterday, 12 November 2014, showed. The manufacturing sector's output growth rebounded to 2.5% in September 2014, snapping decline for last two sequential months mainly contributing to the improvement in IIP growth. However, the mining sector as well as electricity generation growth decelerated to 0.7% and 3.9%, respectively in September 2014.
The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 5.52% in October 2014, from 6.46% in September 2014, data released by the government after trading hours yesterday, 12 November 2014, showed.
The rate of inflation based on wholesale price index (WPI) is seen easing further to 2.1% in October 2014, from 2.38% in September 2014, as per the median estimate of a poll of economists carried out by Capital Market. The government will unveil WPI inflation data for October 2014 at 12:00 noon on Friday, 14 November 2014.
The Reserve Bank of India (RBI) is scheduled to undertake its fifth bi-monthly monetary policy review on 2 December 2014. The pressure is building on RBI to cut policy rates in order to boost growth following sharp slide in inflation on recent slew of cut in fuel prices on the back of falling crude oil prices.
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.
Meanwhile, PSU OMCs are reportedly likely to reduce price of petrol and diesel by about Rs 1 per litre on 16 November 2014. State run oil marketing firms reportedly plan to cut petrol rates for the seventh time since June 2014 and diesel for the third time since the fuel was decontrolled on 18 October in next revision due on 16 November 2014, as Indian consumers gain from the sharp fall in global oil prices before polls in Jharkhand and Jammu & Kashmir. PSU OMCs review fuel prices on 1st and 16th of every month based on the average imported oil price in the previous fortnight.
The government deregulated diesel prices last month. Companies also enjoy petrol pricing freedom since June 2010.
Cut in fuel prices trigger pick-up in demand for vehicles as auto consumers in India are fuel price sensitive, given high fuel prices prevailing in the country.
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