The shares of automakers and auto component manufacturers dropped in trade on December 18, pushing the Nifty Auto index down in the red for the fourth consecutive session. The sharp fall was driven by heavy trading volumes today.
The Nifty Auto index fell more than 0.6 percent to around 27,316, as seen at 1.20 pm. Earlier during the day, the index fell around 2 percent to a one-month low of 27,013.75.
Auto stocks have been losing value for the fourth consecutive session as they are the main victims of sustained pressure following demand worries and broader market risks, said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara.
"Investors of domestic autos, volumes of which appear to be moderating and inventories of which are increasing at dealers, are getting skeptical of the earnings momentum in the near-term. If there will be no obvious triggers - for instance, more robust retail sales, helpful policy or return of growth visibility - the shares of car manufacturers will probably keep fluctuating and being influenced by changes in the macroeconomic situation," he added.
Auto stocks extending losses into a fourth straight session reflects a combination of sentiment reset and short-term de-risking rather than a sharp deterioration in fundamentals, said Naren Agarwal, CEO of Wealth1.
"The immediate triggers include global risk aversion, lingering uncertainty around trade and currency dynamics, and profit-taking after a period of strong outperformance in select names. Autos are a high-beta, rate-sensitive space, and in such phases even modest macro or earnings caution tends to get amplified through positioning unwinds," he said.
From an investment lens, this correction in auto stocks is more about differentiation than distress, Agarwal added. "Demand drivers such as urban discretionary spending, improving rural trends, and replacement cycles remain intact, but the market is now insisting on discipline—inventory control, margin protection and execution clarity," he said.
"The next leg of performance will be earnings-led rather than valuation-driven, with companies showing pricing power, healthy balance sheets and a balanced ICE–EV strategy likely to regain investor confidence faster. For long-term investors, phases like this often create selective entry points, but patience is key; chasing the sector indiscriminately after four red sessions may be premature, while stock-specific opportunities could emerge as the dust settles," he added.
Samvardhana Motherson International shares fell more than 2 percent to trade at Rs 117.09 apiece, the lowest level seen by the stock this week so far. UNO Minda shares followed, dropped nearly 2 percent.
TVS Motor Company, Hero MotoCorp and Exide Industries shares fell more than 1 percent each. Notably, earlier during the day, Hero MotoCorp shares had fallen more than 5 percent after Jefferies downgraded the stock to ‘Underperform’ and cut its target price to Rs 4,950 per share from Rs 5,550 earlier.
The international brokerage said that the company’s domestic two-wheeler market share has plunged to a 25-year low of 28 percent in April-November this year, hurt by demand shift away from entry-level bikes and losses in 110-125 cc motorcycles segment.
Bajaj Auto, Mahindra & Mahindra (M&M), Bosch, Sona BLW Precision Forgings and Bharat Forge shares fell nearly 1 percent each, while Royal Enfield-maker Eicher Motors, Tata Motors Passenger Vehicles and Maruti Suzuki shares were trading in the red with marginal losses.
Bucking the trend, Ashok Leyland gained more than 3 percent, hitting a new 52-week high.
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