Nifty Auto crashes over 3% as crude tops $100 again, LNG fears add pressure; M&M, Maruti among top Nifty losers

Automobiles

• Nifty Auto index fell over 3 percent as crude prices surged
• Top losers: Mahindra & Mahindra, Eicher Motors, Maruti Suzuki
• LNG supply concerns may disrupt auto production and demand

Did our AI summary help?

Auto stocks ended sharply lower on Thursday, with the Nifty Auto index tumbling more than 3 percent and automobile companies dominating the Nifty top losers list, as crude oil prices surged back above $100 a barrel and LNG supply constraints stoked fears of production disruption.

At close, the Sensex was down 829 points or 1.1 percent at 76,034, while the Nifty fell 228 points to 23,639. Market breadth remained negative with 2,409 shares declining against 1,645 advances on the NSE.

Auto stocks among top losers today

The Nifty Auto index ended 3.2 percent lower, the steepest fall among sectoral indices, as rising energy costs and supply-chain concerns weighed heavily on automobile stocks. Among the biggest losers on the Nifty, Mahindra & Mahindra stock plunged 4.32 percent, emerging as the top laggard on the benchmark index.

Other automobile stocks also saw broad-based selling. Eicher Motors dropped about 3.8 percent, while Maruti Suzuki declined around 3.6 percent. Tata Motors Passenger Vehicles fell over 3.2 percent, placing four automobile stocks among the top losers on the Nifty. Two-wheeler maker Bajaj Auto slipped over 1.9 percent.

• Also read | Crude sails past $100: Eternal, Jubilant Foodworks, other restaurant-related stocks fall up to 7% on gas shortage fears

The weakness in the sector comes amid renewed volatility in global energy markets following escalating tensions in the Middle East and reports of shipping disruptions near the Strait of Hormuz, a critical global oil transit route. Crude oil prices surged again during the week, with Brent crude climbing back toward $100 per barrel, raising concerns about higher fuel costs, rising inflation and potential demand pressure for automobile companies.

High crude price may hit demand, LNG shortage may weigh on production

For vehicle manufacturers, higher crude prices have multiple implications. It can add to fuel cost pressures for customers and dampen demand. Analysts also flagged the risk of potential production disruptions due to shortages of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) amid supply constraints linked to the Gulf conflict. LNG is widely used in heat treatment processes for metal components, particularly in casting and forging. Any shortage of gas could disrupt component production, which in turn may halt vehicle assembly lines, an analyst told the Informist.

Brokerage Nomura warned that automobile companies operating at high capacity utilisation levels with limited vehicle inventories could face greater risks if gas supply disruptions persist. “Even if a single supplier faces LNG supply constraints, the production line will halt,” the brokerage said, according to the Informist report. Most vehicle manufacturers and suppliers are currently operating near peak production levels in March with relatively low inventory buffers.

The weakness in automobile stocks stood in contrast to gains in energy-linked companies. The Nifty Energy index rose nearly 2 percent, supported by higher crude prices, while the Nifty Oil & Gas index also ended in positive territory. Market volatility remained elevated, with the India VIX rising about 2 percent.

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.