Auto stocks mixed after RBI keeps key interest rates unchanged

Auto shares were mixed at 12:40 IST on BSE after the Reserve Bank of India kept key rates unchanged in its monetary policy review today, 7 April 2015

Among auto stocks, Ashok Leyland (down 1.22%), Tata Motors (down 1.74%), Maruti Suzuki India (down 1.11%), Hero MotoCorp (down 1.45%) declined. TVS Motor Company (up 1.11%, Bajaj Auto (up 2.89%), Mahindra & Mahindra (M&M) (up 0.35%) and Eicher Motors (up 0.04%) rose.

The BSE Auto index was down 0.76% at 19,487.19. It underperformed the Sensex, which was down 0.72% at 28,300.54.

The BSE Auto index outperformed the market over the past one month till 6 April 2015, falling 0.31% compared with 3.21% decline in the Sensex. The index had also outperformed the market in past one quarter, gaining 5.88% as against Sensex's 5.62% rise.

Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

The Reserve Bank of India (RBI) in its policy review today, 7 April 2015, kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.5%. Consequently, the reverse repo rate under the LAF will remain unchanged at 6.5%, and the marginal standing facility (MSF) rate and the Bank Rate at 8.5%.

RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liability (NDTL) and continued to provide liquidity under overnight repos at 0.25% of bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system through auctions and continued with daily variable rate repos and reverse repos to smooth liquidity.

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