Auto shares drag markets as Tata Motors leads losses on low JLR sales growth

Automobile company shares tumbled on Tuesday, dragging the broader markets down, and giving up part of the post-budget gains.

India’s largest commercial vehicles maker Tata Motors led the losses, falling as much as 2.3% to the day’s lows of Rs 513.25. The S&P BSE Auto index fell 0.93% to 22,079.74 points, with all but one of its constituents in red.

The benchmark BSE Sensex was down 0.18% to 28,388.22 points while NSE Nifty was down 0.19% to 8,784 points.

Tata Motors’ luxury car unit Jaguar Land Rover reported lower-than-expected 4% growth in sales to 47,693 units in January. The sales were dragged by low growth in China, which rose 11% on-year January against 36% on-year in December.

Automobile makers Ashok Leyland, Eicher Motors and Mahindra & Mahindra, and two-wheeler makers Bajaj Auto and Hero Motocorp also dropped between 0.5% and 1.55%. Maruti Suzuki, India’s largest passenger car maker, was trading almost flat at Rs 6,155.35.

The benchmark markets snapped after a four-day winning streak as investors turned cautious ahead of the monetary policy review due tomorrow.

Analysts expect the Reserve Bank of India (RBI) to cut the repo rate by 25 basis points on Wednesday after December inflation hit a two-year low, Reuters said, however adding that some analysts believe that RBI may keep rates unchanged as it continues to assess the impact of demonetisation on inflation. It will be a close call, Reuters said citing analysts.

Other than Tata Motors and M&M, Ambuja Cements and Ultratech Cement were among the top losers. BHEL, BPCL, Bank of Baroda, Bharti Infratel and Kotak Mahindra were the top gainers, rising between 1% and 3.5% each.

Earlier, ITC Ltd rose to a record high of Rs 291.95 after the government sold 2% stake in the tobacco major in a block deal for reportedly 6,700 crore. Railway coach maker Titagarh Wagons Ltd rose as much as 7% after getting a contract worth Rs 100 crore from the Ministry of Earth Sciences.

Tata Motors