Auto Stocks- Controlled food inflation infuses life in the stocks of car makers

Saturday 24 December 2011, 12:06 PM by

The struggling auto, banking and realty stocks get much needed life following some sympathy shown by food inflation that emerges as the most effective ease-out in the last four years. In view of the favourable trend surfacing in the market, the central bank has decided to axe down interest rates to infuse some strength in the limping economic growth. Moreover, a strong showing by European markets has led to a boost in the sentiments of the local market. The market breadth started showing positive signs of late. The barometer index, BSE Sensex, escalated up to reach 127.05 points or 0.81% that depicted a significant rise of 339.56 points from the day's low.

The market commenced on a weak note following the decrease in the stock value. The market reduced the previous losses to enter a new trend. However, the intraday recovery did not last for long.

Auto Stocks- Controlled food inflation infuses life in the stocks of car makers | CarTrade.com
Interest rate sensitive stocks recover as food inflation plunges to 4-year low

India's largest sports utility vehicle manufacturer by sales, Mahindra & Mahindra (M&M), witnessed an increase of 0.74%, taking the previous 5.97% gain ahead. The company mulls upon hiking the price of its vehicles by up to 3% during January 2012 in order to cushion against rising raw-material costs. The overall sales of the car maker climbed 52.7% to 40,722 units during November 2011 as against November 2010. The launch of new models of its South Korean unit Ssangyong Motor Company at the Auto Expo 2012 is also on the cards.

Maruti Suzuki India, the country's largest car manufacturer, experienced a swell of 1.46% after going up by 5.1% recently. Maruti will enter the Auto Expo with its all-new multi utility vehicle (MUV), Ertiga and an unnamed Sports Utility Vehicle (SUV).

India's biggest passenger vehicle maker in terms of sales, Tata Motors, gained 4.12% high, with the stock continuing to move up. The company's sales at global level increased by 35% to 1,08,028 units during November 2011 in comparison to November 2010. Its subsidiary, luxury Jaguar Land Rover registered a 27% rise in sales touching 29,183 units mark.

Thus, car makers have taken a sigh of relief after the easing of food inflation rate; however, the trend does not seem to be a permanent resident in the auto industry.

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