Auto stocks clock top speed again, 14 per cent returns in market rebound

The Indian benchmarks have topped their all-time high levels on Friday’s session, the second time in this week. The Sensex touched an intra-day all-time high of 40,747. During its bad phase, which remained almost throughout FY19, the auto industry eroded the maximum investor wealth. With consistent decline in sales numbers, the industry suffered the most. The stock prices of all the industry participants (OEMs and auto ancillaries) declined by around 36 per cent since September 2018 till November 2019.

The announcement to slash corporate tax to 25 per cent from earlier 37 per cent, was the biggest turning point for the markets, which arrived as the much needed booster dose for market sentiments. Since then, the Sensex has seen robust growth of more than 10 per cent to clock its high levels. Since rebound, the auto stock gave stellar gains to investors. On an average, auto OEMs witnessed increased returns by 17.48 per cent till November 7, 2019.

Auto stocks, such as Tata Motors, Ashok Leyland, Eicher Motors, Escorts, and Maruti, rose as much as 23 per cent to 38 per cent. The auto ancillary stocks, too, rallied on the sentiment to give more than 11 per cent returns since September 19 to November 7 this year. JBM Auto topped the list of auto ancillary stock with 53 per cent during this period. Other major players, such as Endurance Technologies, Motherson Sumi, Bosch, and Minda Industries, increased investor wealth by 29 per cent, 28 per cent, 13 per cent, and 9 per cent, respectively, till November 7, 2019.

The street expects the sentiment to continue with the rise in auto sales numbers. The sentiment may further boost the auto sector, with the transitioning to BSVI being on the verge of completion.