Auto stocks lead the rebound from War lows — Here are factors aiding the recovery

The Nifty Auto index surged nearly 7% on Wednesday, April 8, and is the top gainer among sectoral indices. This is the biggest single-day gain that the index has seen since April 2020.During the US-Iran war, the auto index had declined 17% in the month of March. However, since then, the index has gained 10% so far in the month of April.

The index’s recent decline was as a result of a surge in crude prices, increase in input cost, supply chain challenges and concerns over production cuts by companies.The Iran war led to a global market sell-off and also resulted in a sharp surge in oil prices. However, Iran and US agreeing to a two-week ceasefire has resulted in stocks surging and oil becoming cheaper.

Wednesday’s big move can be attributed to the sharp drop in crude and gas prices, production being normal at the moment, most automakers announcing price hikes on their models and the auto sales in March being largely in-line with expectations.Going forward, investors should watch out for the impact of the price hike undertaken by companies, and the April registration data, which is muted so far.

All 15 stocks in the Nifty Auto index are trading with gains on Wednesday, rising 3.7% to 13%.

Ashok Leyland, Samvardhana Motherson International, Tata Motors PV, Eicher Motorsand Uno Minda are the top gainers in the index, with shares of Ashok Leyland reporting their biggest single-day gain in six years.

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