Crude Oil Surge Weighs on Auto Stocks Despite Strong August Sales
Auto stocks plummeted on September 2 as surging crude oil prices weighed heavily on sentiment, offsetting robust August sales numbers. The Nifty Auto index fell 2.24 percent to 27,853.55 at around 10:30 am, underperforming the broader market. Crude oil prices surged after US-Iran tensions escalated overnight, rising 0.8 percent to $95.40 a barrel and pushing Brent crude higher.
Higher crude prices can raise input and transportation costs for auto companies, fuel inflation, and potentially weigh on vehicle demand. The risk-off mood in Indian equities added to the pressure on auto stocks, with all Nifty Auto constituents trading in the red. Hero MotoCorp was the biggest loser, tumbling 5.18 percent to Rs 5,267.50.
Despite the decline, August sales numbers were strong across much of the automobile industry, driven by healthy demand and a favorable base from last year's tax cuts. Jefferies reported that auto demand remained robust in August, with registrations of two-wheelers, passenger vehicles, and trucks growing 24-29 percent year-on-year.