Auto scrips shake off fuel -hike setback

DALAL STREET SPIKES

Auto scrips were in the limelight, witnessing buying support at lower levels. Maruti Udyog was the second biggest gainer in the Sensex basket, up 4.39 per cent to close at Rs 399.40, followed by Tata Motors, up 3.01 per cent to close at Rs 401.85.

Bajaj Auto gained 1.63 per cent to Rs 900.50 and Mahindra and Mahindra was up 1.89 per cent to close at Rs 445.15. Brokers said that auto scrips attracted buying after being on the selling list of most investors on Wednesday mainly because of fuel price hike.

Analysts said that apprehensions in the market that hike in petrol and diesel prices may lead to a slowdown in vehicle sales may be unfounded as in the long term, sales volumes should not be hit and this reaction to the fuel hike was more sentimental and immediate.

In fact, the new government's focus on rural development augurs well for the auto sector, specially for commercial vehicles, tractors and two-wheelers which depend a lot on rural sales for volumes.