Seven auto stocks rose by between 0.54% to 4.14% at 12:50 IST on BSE on hopes further fuel price cut may trigger pick-up in demand after reports PSU OMCs are likely to reduce price of petrol and diesel by about Rs 1 per litre on 16 November 2014.
Meanwhile, the S&P BSE Sensex was up 137.07 points or 0.49% at 28,047.13.
Ashok Leyland (up 4.14%), and Maruti Suzuki India (up 0.54%) gained.
Tata Motors rose 2.24% on reports the company has raised prices of commercial vehicles in the range of 1-2% across categories..
Eicher Motors rose 1.52% at Rs 13,190.40. The stock hit a record high of Rs 13,201 in intraday trade. The company unveils Q3 September 2014 results today, 12 November 2014.
Two-wheeler stocks also surged. Hero MotoCorp (up 1.32%), Bajaj Auto (up 2.53%), and TVS Motor Company (up 1.67%) gained.
The BSE Auto index had underperformed the market over the past one month till 11 November 2014, rising 6.06% compared with the Sensex's 6.13% rise. The index, had, however, outperformed the market in past one quarter, gaining 15.31% as against Sensex's 9.37% rise.
But, Mahindra & Mahindra (M&M) declined 0.13% at Rs 1,259. The stock was volatile. The stock hit a high of Rs 1,275 and a low of Rs 1,256.05. M&M at the fag end of trading hours yesterday, 11 November 2014, announced that it has increased prices of its passenger and commercial vehicles by an average of 1%. This increase would be in the range of Rs 2,300 to Rs 11,500 (ex- showroom) depending on the model and has been effective this month, the company said. The price hike has been necessitated to partly offset the impact of rising input costs, M&M said.
M&M also announced increase in prices of its tractors effective from this month. The increase is in the range of Rs 6,000 to Rs 10,000 depending on the model. The price hike has been necessitated owing to increase in commodity prices and conversion costs, M&M said.
Meanwhile, state run oil marketing firms reportedly plan to cut petrol rates for the seventh time since June 2014 and diesel for the third time since the fuel was decontrolled on 18 October in next revision due on 16 November 2014, as Indian consumers gain from the sharp fall in global oil prices before polls in Jharkhand and Jammu & Kashmir. PSU OMCs review fuel prices on 1st and 16th of every month based on the average imported oil price in the previous fortnight.
The government deregulated diesel prices last month. Companies also enjoy petrol pricing freedom since June 2010.
Brent crude futures fell amid signs that OPEC members are reluctant to reduce supply even as prices slump. Brent for December delivery was off 42 cents at $81.25 a barrel. The contract had fallen 67 cents a barrel to settle at $81.67 a barrel during the previous trading session on Tuesday, 11 November 2014, the lowest price since October 2010. Brent for January 2015 delivery was off 30 cents at $81.70 a barrel.
Cut in fuel prices trigger pick-up in demand for vehicles as auto consumers in India are fuel price sensitive, given high fuel prices prevailing in the country.
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