Auto stocks weak on excise hike fear

Automobile stocks have declined for the second day in a row, on fears of possible excise duty hike in the forthcoming Union Budget.

Maruti Suzuki, Mahindra & Mahindra, Hero Honda, Tata Motors and Ashok Leyland have declined 1-3% each on the BSE. They are down over 4% each in last one week.

The BSE Auto index is the worst performer among the secotral indices today. The index has declined 1% so far. The auto index has dropped 4.3% in the last one week, as compared to 1% fall in the Sensex in the same period.

The government is expected to raise excise duties, by as much as 2%, on automobiles in Union Budget 2010-11. A hike in excise duty will result to higher prices for new vehicles.

Rising material costs and fears of interest rate hike has also lead to the fall in auto stocks.

Mahindra & Mahindra is the biggest loser, down 3% to Rs 953. The stock has shed 7% in last one week from Rs 1,026 on February 17.