Why Auto stocks falling in the market Now?

Stocks in many Auto companies are reeling under pressure after reports that the two wheeler auto manufacturers are set to cut production. The inventories levels with 2-wheeler manufactures are reportedly high, which is compelling them to reduce production to rationalize inventory at the dealer level.

The sales for the whole industry between April – February, 2018 has been in single digits of below 7% growth as against to 14% growth, on year-on-year basis. Therefore, sales decelerating coupled with, higher insurance costs and low retail demand has forced two-wheeler makers to cut production.

The major auto companies such as Hero, Honda and Royal Enfield will be cutting production from March up until May by 15 percent. However, Baja Auto is stated that it will not cut production.

Reactively, the NSE’s Nifty Auto Index was down 0.78% at 8,559.60, with Hero MotoCorp (-down 2.06%), Eicher Motors (-2.19%) and TVS Motors which falls 2.77% during mid-market session. Except Tata Motors, all the components in the Nifty auto index are trading in the red.

Meantime, The BSE benchmark Sensex was trading 56-points, higher to 38,150-mark and the NSE Nifty advanced by 13- points to 11,475-level at 12.30 pm.

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