The Nifty Auto index experienced a decline of nearly 1 percent on December 15, with key players in the automotive industry feeling the heat. This downturn comes after a two-session gaining streak, leaving investors wondering what's behind the fall.
One major factor is the recent imposition of a 50 percent tariff on Indian goods by Mexico, set to take effect on January 1, 2026. This move targets imports from countries without a free trade agreement (FTA) with Mexico, including India, China, South Korea, Thailand, and Indonesia. The tariff hike is expected to affect a wide range of goods, including automobiles, auto components, steel, aluminum, textiles, plastics, and more.
According to JM Financial, the top commodities exported to Mexico from India in FY25 included auto and auto components, electronics, machinery, organic chemicals, aluminum, and iron and steel. Mexico is the second-largest export destination for Indian auto and auto components, making these goods particularly vulnerable to the tariffs.
The decline in share prices may also be attributed to profit-booking, as the index had gained over 1.6 percent in the past two sessions. With the index nearing its 52-week high of 28,099.65, investors may be taking this opportunity to book profits at elevated levels.
Despite the current downturn, Citi remains optimistic about the future of Indian auto sales, citing macro tailwinds such as GST, interest rate cuts, and income tax restructuring. The company predicts a 5.1 percent rise in car sales in FY26 and 5.2 percent in FY27, with annual two-wheeler sales expected to grow 5.5 percent and 7 percent in the same periods.
The top losers on the index today included Mahindra & Mahindra (M&M), Royal Enfield-maker Eicher Motors, Sona BLW Precision Forgings, and Bajaj Auto, all of which fell by over 1 percent. Maruti Suzuki, Samvardhana Motherson, and Bharat Forge also experienced declines, albeit with more marginal losses.
As the automotive industry continues to navigate the complexities of global trade and market trends, it's essential to stay informed about the latest developments and their potential impact on the market. Stay tuned for more updates on the Nifty Auto index and the world of auto stocks.
Download the TradeKaizen app to practice F&O trading with real-time market data anytime, anywhere.
Get it on Google PlayConnect with fellow traders, share strategies, and improve your trading skills in our Telegram group.
Join Telegram