A selloff in the global equity markets that was triggered after the recent Chinese currency devaluation and fears that the world’s largest economy is going through slowdown wreaked havoc on Indian automotive stocks today.
In what was the largest single-day fall for Indian automotive stocks since 2008, shares of automobile manufacturers and ancillary makers were hit alike. The S&P BSE Auto Index fell 1,351.50 points or over 7% from the last close at 17,443.64 points today.
Among the biggest losers on the Bombay Stock Exchange today were Ashok Leyland, MRF, Bajaj Auto, Tata Motors, Maruti Suzuki and Eicher Motors. The fall in these stocks ranged from 11.10 percent to 6.93 percent.
Ancillary makers like Bosch, Bharat Forge, Cummins, Motherson Sumi and Exide also saw sharp sell-offs today and ended in the red.
According to an analyst with a US-based brokerage, the mood in Dalal Street is likely to remain sour over the next few days and sell-offs could continue. Tyre makers and ancillary makers are likely to be among the most vulnerable stocks as lack of anti-dumping duties is hurting Indian OEMs.
The Indian tyre industry, which is already suffering from dumping of cheap tyres from China, will now have to see even more pricing pressure as the Yuan devalues. Similarly, the influx of spare parts and other ancillary from the country is likely to dent margins of Indian manufacturers.