Nifty Auto plunges in line with market as BJP unlikely to get majority on its own

The Nifty Auto index, which hit an all-time high on Monday, saw a sharp correction today in line with the broader market

By Kiran Murali calendar 04 Jun 2024 Views icon1835 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Nifty Auto plunges in line with market as BJP unlikely to get majority on its own

Shares of automotive companies fell sharply in line with the broader market in intraday trading on the National Stock Exchange today as early vote count indicated that the BJP-led National Democratic Alliance might not get a strong majority for its third term as predicted in the exit polls. Investors and the industry have been expecting political stability and policy continuity.

The Nifty Auto index was highly volatile today, falling as much as 8% to 22,026.30 points in the intraday trading, with most of the constituent stocks in the red. At 12:55 pm today, Nifty Auto was down 3.7 percent at 23,113.10 points, having pared some losses. This compares to a 5 percent drop in the broader Nifty 50 index. Nifty 50 had also fallen as much as 8.5% earlier in the day.

Shares of Tata Motors, Balakrishna Industries, Ashok Leyland, Samvardhana Motherson International, Eicher Motors, Exide and MRF fell more than 5% during the day.

Nifty Auto had hit an all-time of 24,159 points on Monday after exit polls released on Saturday showed a continuation of the NDA alliance with a strong majority of over 350 seats. However, today's early vote count trend showed that the NDA alliance was leading in only around 280 seats. Counting is still underway and a clear picture is expected to emerge by late afternoon.

Market experts noted that the correction is in line with that in the broader market, and not specific to the sector. “Auto stocks have witnessed selling along with the broader markets; hence, the Nifty Auto index has breached important supports. The next support for the index is placed around 21200 which is the 100 DEMA [double exponential moving average],” said Ruchit Jain, lead research analyst at 5paisa.

 

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