October auto sales lift Indian stocks as festive demand stays strong

Indian auto stocks rose on Monday after October sales figures showed that demand remained firm during the festive season, despite a high base from last year’s tax-cut-driven surge.

The Nifty Auto index gained 1.22 per cent to 25,733.6 points as of 9:24 am IST. Maruti Suzuki shares climbed 2.58 per cent to Rs 11,691, while Ashok Leyland rose 2.13 per cent to Rs 147.9. Tata Motors Passenger Vehicles advanced 1.87 per cent to Rs 270.35, and TVS Motor gained 1.37 per cent to Rs 4,252.5.

October sales indicated that consumer demand had held up despite a challenging year-on-year comparison. However, analysts said the post-festive period would be a more significant test, with rising input costs and supply constraints posing potential risks to growth.

Jefferies said two-wheeler demand remained strong, while passenger vehicle sales gained momentum despite the tough comparison. TVS Motor, Maruti Suzuki and Hero MotoCorp recorded the biggest positive surprises against the brokerage’s October wholesale forecasts. Jefferies retained TVS Motor and Eicher Motors as its preferred picks.

Emkay Global said the shift of Diwali from October last year to November this year had distorted year-on-year retail comparisons, masking the underlying strength in demand.

The brokerage favoured two-wheeler and commercial vehicle manufacturers over passenger vehicle companies, citing their greater ability to pass on rising commodity costs through price increases.

TVS Motor reported a 29 per cent increase in October sales, while Maruti Suzuki recorded its highest-ever monthly sales total of 276,120 vehicles, up 25 per cent. Tata Motors’ commercial vehicle sales rose 27 per cent, while Ashok Leyland reported growth of 23 per cent.

Tractor sales remained a weak spot. Mahindra & Mahindra reported a 12 per cent decline in total sales. Analysts flagged the high comparison base and rising input costs as potential risks, although Mahindra attributed the fall primarily to the shift in festive dates.

(With inputs from Reuters)