Auto stocks run out of fuel on Indian bourses

AHMEDABAD (makemystocks): Metal, auto, realty, bank, finance and information technology stocks were facing selling pressure on Indian bourses since morning Thursday. Metal index was top among the losers on Bombay Stock Exchange (BSE), with a loss of around 1.70% at 14452 followed by Realty and Auto sectors which ended with a loss of around 1.40% and 1.37% at 3152 and 8209 respectively.

The auto sector was hit by heavy selling today as the major auto companies announced raising prices of their vehicles owing to high metal and rubber prices. The price of natural rubber, the main raw material for tire makers, has increased 29% so far in 2010.

Key losers here included Tata Motors, Maruti, and Hero Honda. These stocks bore the brunt of profit booking after the gains seen over the past few weeks. These companies are expected to pay off in the medium term given that the commodity prices are expected to fall on the back of China worries.

This will help these companies improve their operating margins, which will also be aided by robust demand for automobiles that has picked up pace over the past few months.

Particularly in the Auto sector some of the stocks close today with a loss of around 2%. Tatamotors Ltd. (NSE: TATAMOTORS) closed today at Rs. 762 with a loss of around 2%.

Another stock Mahindra & Mahindra Ltd. (NSE: MAH&MAH) closed at Rs. 615 with a loss of around 2%. Mahindra & Mahindra (M&M) said on Wednesday it has sought to throw out a lawsuit by distributor Global Vehicles over delays in the launch of its sports utility vehicle Scorpio and pickups in the US.

India's top utility vehicle maker filed a motion to dismiss the lawsuit in the US district court for Northern Georgia, the company said in a statement.

While Maruti Suzuki India Limited (NSE: MARUTI) closed today at Rs. 1400 with a loss of around 1.67%. The country's largest car maker, Maruti Suzuki India, today reported a 17.28 per cent jump in June sales to 88,091 units over the same month last year.

Chennai-based, country's third largest two-wheeler maker, TVS Motor Company today posted an increase of 33 per cent in domestic sales of its two-wheeler range while also logging its highest ever three-wheeler sales in a month. TVS Motor Company Limited (NSE: TVSMOTORS) closed today at Rs. 118 with a loss of around 1.13%.

Hinduja group flagship and commercial vehicles (CV) major Ashok Leyland (ALL) on Tuesday said it has increased prices of its medium and heavy duty vehicles by about 3% with immediate effect. The price rise will be in the range of Rs 20,000 and Rs 50,000. The move comes in the wake of hike in prices of raw material like steel, tyres, castings among other things, said the company in a release. Today Ashok Leyland Limited (NSE: ASHOK LEYLAND) closed at Rs. 62.60 with a loss of around 1.65%.

While Bajaj Auto Ltd. (NSE: BAJAJ-AUTO) closed flat 0.6% at Rs. 2489. Hero Honda Motors Limited (NSE: HEROHONDA) closed today at Rs. 2020 with a loss of around 1.39.