Selloff in auto stocks intensifies after a four-day rally; Hero Moto, Bajaj, Maruti top losers

Auto index snaps four-day gaining streak following US trade deal hopes: Maruti, M&M among top losers

Shares of auto makers tumbled on May 20, pushing the Nifty Auto index lower by more than 2 percent to be the top sectoral loser, likely on profit booking after a four-day gaining streak.

The Nifty Auto index has seen significant surge recently, rising nearly 9 percent in the past one month. Last four sessions of gains were recorded after US President Trump hinted at a trade deal with India that would effectively reduce tariffs on Indian imports into America.

Earlier on May 20, Bloomberg News reported that an interim trade deal could likely cover market access for industrial goods, farm products and address non-tariff barriers such as quality control requirements.

Tube Investments of India was the top loser on the index, dropping 3.5 percent after having risen nearly 17 percent in the past one month.

Hero MotoCorp, Bajaj Auto and Maruti Suzuki shares followed, plunging nearly 3 percent each. Bharat Forge, TVS Motors and Eicher Motors meanwhile fell over 2 percent each.

Mahindra & Mahindra (M&M), Balkrishna Industries, Exide Industries and Tata Motors shares were down over 1 percent each, while Samvardhana Motherson shares were down nearly 0.9 percent.

Few stocks bucked the trend to trade with marginal gains, including MRF and Ashok Leyland. On May 19, Ashok Leyland had announced that it will also consider issuance of bonus shares during its upcoming board meeting scheduled on May 23.

US President Donald Trump had introduced a slew of tariffs on foreign imports, including cars and related components. India's automakers with exposure to US exports saw a significant decline in their share prices following the tariff announcements. However, Trump has since then softened his stance on tariffs later. Earlier this month, he said that the Indian government has "offered us a deal where basically they are willing to literally charge us no tariff".

The fall in the automotive share prices comes amid an overall downturn in the market, with benchmark Sensex down over 600 points near 81,450 and Nifty 50 continuing to trade below the 25,000 mark.