Market movers: What is ailing auto stocks? It is more than what meets the eye

NEW DELHI: Auto stocks are being beaten left, right and centre ever since the crude oil prices have started climbing, sensing the supply disruptions due to the ongoing war in Europe.

In the last 12 sessions, the Nifty auto index has closed with a cut in eleven instances. The index has fallen 14 per cent in the period. The selling has only intensified in the last few days in March.

Another reason behind the intense selling seems to be falling sales at the retail level. The sales data published by companies are wholesale data and may not be a true picture of the retail sentiments.


However, the dealers’ body said domestic passenger vehicle retail sales declined 8 per cent in February as the companies continued to suffer production loss due to chip shortage.

This is when companies have said they are mostly out of the chip supply woes.

IT proves its defensive status
Amid the gloom and doom, IT stocks are shining like a beacon. Even when every sector seems to be under selling pressure, many high quality IT stocks are giving reasons to cheer investors.

The reason behind this is familiar: The fall in rupee in the last few days. The rupee extended its weekly losses on Friday, breaching 76 per dollar. A falling rupee means more revenue for export-oriented companies.

The soaring crude oil and commodity prices have also hit economies hard since the Russia-Ukraine conflict began. Emkay Global expects the rupee to see further depreciation towards 76.44 levels if the pair sustains above 76.10.

That means IT stocks will continue to gain traction.

Titan tumbles
Titan was the biggest Nifty loser on Thursday as the crisis worsened in Europe, lifting gold prices even higher. Rising gold prices mean the demand for jewellery will be lower, meaning lower revenue for the company.

Analysts now see yellow metal out of reach of many buyers for some time, given no solution seems to be in sight to the crisis in Europe.

Gold futures traded above Rs 52,000 per 10 gram. Titan Company shares ended down over 5 per cent.