Nifty Auto recovers 1% from day's low as concerns over Tesla's India entry ease

Nifty Auto recovers 1% from day's low as concerns over Tesla's India entry ease

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The Nifty Auto index recovered nearly 1.1 percent (over 230 points) from its day's low to stand at 21,522 on February 24. This comes as auto stocks made a strong recovery, after recording strong losses amid a persistent selloff and concerns over Elon Musk-led Tesla's entry into the Indian market.

The shares of Mahindra & Mahindra (M&M) were the top gainer on the index, rising over 1 percent to trade at Rs 2,706 apiece. M&M was the worst hit in the recent past due to uncertainty over the impact of Tesla's entry on its electric vehicle segment. The surge in share price came after brokerage Jefferies reiterated its 'Buy' rating, setting a target price of Rs 4,075. This marks a potential upside of nearly 53 percent from the stock's previous closing price. The brokerage has further said that Tesla’s entry into the Indian market will have limited impact on the automaker.

TVS Motor also recorded strong gains. The stock has recovered nearly 3 percent from the day's low to trade at Rs 2,351 per share.

Eicher Motors and Hero MotoCorp shares were also trading in the green with minor gains.

Despite the sharp recovery, several auto stocks were still trading in the deep red. The shares of auto majors Tata Motors and Maruti Suzuki were trading with minor losses, while those of Bajaj Auto were down nearly 1 percent.

Notably, global brokerage firm CLSA has recently said that the entry of American EV major Tesla won't significantly impact the already existing automakers in the domestic market, including Maruti Suzuki, Hyundai Motors and Tata Motors, among others. Tesla's cheapest car model retails for over $35,000 (over Rs 30 lakh) in US. This is significantly higher than the average selling price of cars in India, which stands at nearly Rs 12 lakh, CLSA noted in its recent note to clients.

Brokerage Nomura believes that the soon-to-be-announced EV policy guidelines will support faster adoption of electric vehicles. It added that while the policy will help Tesla in its Indian market debut, it won't negatively impact Indian automakers as Tesla competes with luxury OEMs. It is unlikely for Tesla to launch a Rs 21 lakh vehicle, it added.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.