Auto Stocks Suffer Steep Decline, Nifty Auto Index Falls More Than 2%

Indian Auto Stocks Under Pressure

The Nifty Auto index fell over 2% on Friday morning, marking a second consecutive day of decline. The broader market was also weak, with the Sensex falling by over 900 points to 75,100, and the Nifty declining by 1.3% to 23,325. Market breadth remained negative, with 894 shares declining against 2,530 advances.

JPMorgan, a leading brokerage firm, has warned of dual risks for the Indian auto sector: cost inflation and potential production disruptions due to geopolitical tensions and rising commodity prices. Despite these near-term risks, the brokerage prefers Maruti Suzuki, Mahindra & Mahindra, and Hyundai Motor India due to their relatively stronger growth visibility and valuation support.

Auto-component stocks were broadly sold down in early trade, with Ashok Leyland shares falling by over 4%, Bharat Forge declining by about 4%, and Tube Investments falling by around 3%. Passenger vehicle manufacturers also saw significant declines, with Tata Motors Passenger Vehicles stock falling by over 3.7%, Maruti Suzuki declining by over 2.1%, and Mahindra & Mahindra down by over 1%.

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Two-wheeler stocks were also under pressure, with Hero MotoCorp trading about 3.4% lower, Bajaj Auto falling by about 2.4%, and TVS Motor slipping by around 1.3%.

According to JPMorgan, shortages of Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG) could potentially lead to production shutdowns or disruptions for automobile manufacturers and component suppliers. The brokerage also warned of potential disruptions to Compressed Natural Gas (CNG) availability at fuel pumps, which could influence consumer preferences. Higher fuel prices and rising commodity costs could also weigh on profitability for automobile companies, while global shipping disruptions could impact export volumes.

The Nifty Auto index has fallen by about 12% so far in 2026, compared with a roughly 9.5% decline in the Nifty benchmark index. Despite this, JPMorgan noted that automobile retail volumes in March remain strong so far, although weakening consumer sentiment could threaten the demand recovery seen after recent GST cuts.