D-Street Buzz: Auto stocks gain led by Maruti, M&M; Amara Raja Batteries jumps 5%

The Indian stock market continues trading in the green largely helped by Reliance Industries which is the top index gainer. Sensex is up 427.38 points or 1.39 percent at 31064.09, and the Nifty jumped 104.15 points or 1.16 percent at 9085.60.

The auto index jumped over 2 percent outperforming all other indices. The top gainers included Mahindra & Mahindra, Hero MotoCorp and Maruti Suzuki which jumped 2-3 percent. Share price of Amara Raja Batteries spiked over 5 percent followed by Bajaj Auto, Eicher Motors and Exide Industries.

Amara Raja Batteries informed the exchanges that it has partially resumed operation at manufacturing facilities on a limited scale effective from April 20, 2020.

The government's call for a nationwide lockdown is punching a hole of Rs 1,200 crore per day in the coffers of the auto component industry, smaller establishments are staring at a wipeout situation with every passing day.

2 & 3-wheeler manufacturer Bajaj Auto has proposed a 10 percent pay cut for factory employees. The proposed cut will be for little over half of April and until the lockdown is lifted on May 3.

Bajaj Auto saw its March domestic two-wheeler sales fall by 55 percent to 98,412 units hit by loss of production due to the lockdown announced by the government on March 23. Its total sales for March slumped by 38 percent to 242,575 units.

Motilal Oswal has lowered its FY21 EPS estimates for all auto companies under its coverage, with a double-digit cut of 10–60 percent, with the highest cut in EPS in companies with high operating leverage and/or high global exposure.

Auto industry body SIAM said it has sought temporary GST rate cut on vehicles and introduction of incentive based scrappage policy from the government at the earliest in order to revive the sector amid the coronavirus pandemic.