Auto stocks under pressure as ahead of May sales numbers

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Auto stocks remain under pressure ahead of the May auto sales announcement on June 1. The sales numbers are expected to be weak given the lockdowns in various parts of the country to curb the spread of coronavirus.

India has been grappling with a highly contagious variant of coronavirus amid second wave where the number of daily new Covid cases peaked around 4 lakh in early May. The number of cases have been falling since and are now hovering around 2 lakh per day.

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As compared to the numbers in May 2019, May 2021 volumes are expected to witness a double-digit decline across segments. As volumes are not comparable YoY due to the low base last year, Emkay has weighed them against May’19 numbers.

Last year in May, the Modi government had announced a nationa-wide lockdown to tackle the first wave of coronavirus.

At the time of writing this copy, Nifty auto index was down 0.5 percent dragged by the M&M, Tata Motors, Amara Raja Batteries, Hero MotoCorp and TVS Motor, while Bosch and Motherson Sumi rose 1 percent each.

In comparison, Nifty hit fresh record high of 15,535.85 intraday.

The Sensex was up 353.69 points or 0.69% at 51,776.57, and the Nifty was up 96.90 points or 0.63% at 15,532.60.

According to Emkay, Tractors/PVs should see a lower decline in comparison with 2Ws/ CVs and expects a swift recovery in volumes from Q2FY22 due to easing of lockdowns and pent-up demand.

Agricultural field activities have not witnessed any obstruction/ problems due to the second wave. However, despite being considered as an essential category, Tractor volumes should be subdued on account of the severe impact of the pandemic in rural areas, it added.

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