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Informist, Friday, May 9, 2025

MUMBAI – The direction of automobile and auto-ancillary stocks next week will likely be determined by how India-Pakistan cross-border tensions pan out over the weekend, analysts said. Technical analysts believe that if the conflict between the two neighbours escalates over the weekend, shares of automobile companies would be the worst hit. Focus will also be on the March quarter earnings of large-cap companies such as Tata Motors, Eicher Motors, and Hero MotoCorp.   

The Nifty Auto closed slightly lower at 22627.80 points on Friday. This week, the sectoral index gained 1.5% against the 1.3% decline in the benchmark Nifty 50 index. Tata Motors was the best performer in the week among the sectoral index constituents, and gained nearly 9%. Bharat Forge, Samvardhana Motherson International, and Hero MotoCorp gained 3-5%. Apollo Tyres and Eicher Motors were the worst performers on the index this week, closing down over 2% each. 

The tension between India and Pakistan escalated late Thursday, with Pakistan firing 300-400 drones at 36 locations along the western border, targeting military installations. Indian forces intercepted the drones and launched a counter-drone attack on four air defence sites in Pakistan, the Indian government said.

"In a worst-case scenario, if the tensions were to escalate, there could be disruptions in the production of some companies concentrated in the north (India), but more than that, the demand will be hit," an analyst at a large brokerage said. "In a war scenario, no one would want to buy a vehicle," the analyst said. There could be fears of damage due to likely attacks and vehicle insurance premiums could go up, denting sentiment further, the analyst said. 

As of now, no Indian original equipment manufacturer has announced any closure of manufacturing units. To be sure, parts of states like Punjab, Haryana, Rajasthan and Gujarat are on high alert along with New Delhi. Maruti Suzuki has three plants in Haryana, located at Manesar, Kharkhoda, and Gurgaon. Analysts also said that until and unless the situation escalates to a full-blown war between the two countries, there would not be any shutdown. 

However, a senior analyst at a large retail brokerage firm said Balkrishna Industries could be the worst hit in the sector, as its manufacturing facility at Bhuj is vulnerable to the ongoing Indo-Pakistan frictions. Bhuj is one of the sites that Pakistan had targeted on Wednesday, reports said. Balkrishna Industries has two manufacturing units in Bhuj, according to the company's investor presentation. 

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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Gopika Balasubramanium

Edited by Saji George Titus

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