Auto stocks slide after RBI policy

Shares of seven auto firms fell by 0.17% to 0.85% at 11:23 IST on BSE after the Reserve Bank of India kept key interest rates unchanged in its monetary policy review today, 9 August 2016.

TVS Motor Company (down 0.85%), Eicher Motors (down 0.7%), Mahindra & Mahindra (down 0.66%), Hero MotoCorp (down 0.56%), Escorts (down 0.5%), Maruti Suzuki (India) (down 0.3%) and Ashok Leyland (down 0.17%), edged lower. Bajaj Auto (up 0.05%) and Tata Motors (up 0.42%), edged higher.

The S&P BSE Auto index was down 0.22% at 21,768.14. It outperformed the S&P BSE Sensex, which was down 0.24% at 28,116.10.

The BSE Auto index had outperformed the market over the past 30 days till 8 August 2016, rising 10.69% compared with 3.89% rise in the Sensex. The index had also outperformed the market in past one quarter, rising 18.54% as against Sensex's 9.35% rise.

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

The Reserve Bank of India (RBI) after the third bi-monthly monetary policy today, 9 August 2016, decided to keep the policy repo rate unchanged at 6.5%. Consequently, the reverse repo rate will remain unchanged at 6%. RBI also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4%.

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