Nifty Auto Drops Nearly 3% as M&M and Tata Motors Decline; Maruti Suzuki Hits Record High

The Nifty Auto index fell almost 3% to 25,094 points during intraday trading, led by a sharp drop in Mahindra & Mahindra (M&M) shares. This was the biggest intraday drop since June 4. By 1:30 p.m., the index recovered slightly but was still down 2%, trading at 25,307 points.

Key Points:

• M&M Shares Fall: M&M shares plunged nearly 8% to ₹2,697, the lowest since June 7, causing 80% of the index’s drop. This followed M&M’s announcement of a temporary price cut of up to ₹2 lakh for its XUV700 AX7 model, effective for four months starting July 10, to boost sales.
• Tata Motors: Tata Motors also cut prices on its Harrier and Safari SUVs until July 31. Analysts believe these price cuts indicate weakened demand, with extreme heat waves affecting consumer behavior. Tata Motors shares fell 2.85%.
• Other Losers: Exide Industries shares fell 5% to ₹549, continuing a 12% decline since hitting an all-time high of ₹620 on June 25.

Gainers:

• Maruti Suzuki: Maruti Suzuki shares hit a new all-time high of ₹13,299 with a nearly 4% gain. This follows a 6.60% rise after the Uttar Pradesh government waived registration fees on hybrid cars, significantly benefiting Maruti Suzuki.

Market Context:

• The Nifty Auto index had been gaining for eight consecutive months since October 2023, up 58.33% by June 2024. Today’s decline may also be due to profit booking.
• Frontline Indices: The Nifty 50 and Sensex both dropped 1% amid uncertainty about a US Federal Reserve interest rate cut this year. Fed Chair Jerome Powell noted that inflation remains above the 2% target but is improving.

Expected Economic Data:

• The upcoming consumer price index (CPI) data for June, due on Thursday, is expected to show a 0.1% month-over-month rise in headline prices and a 0.2% rise in core prices, with annual gains of 3.1% and 3.4%, respectively.

This article highlights key movements in the Nifty Auto index and major stock shifts in the automotive sector.