At 12:49 pm; Nifty Auto index, top loser among sectoral indices, was down 3 per cent, as compared to 1.2 per cent decline in the Nifty50 index.
According to reports, estimates by Federation of Automobile Dealers’ Association (FADA) suggests that the demand for passenger vehicles - two-wheelers and four-wheeler - is expected to decline by 25 per cent this Navratri-Dussehra season, as compared to the last year.
"Two-wheeler demand is expected to take a bigger hit this time whereas car sales will be almost par with last year across in Gujarat. With cost of vehicles and cost of ownership of vehicles going up, and people’s income shrinking, demand has remained low-key," reports suggested quoting Pranav Shah, chairperson – Gujarat, FADA.
Meanwhile, analysts are also viewing the developments cautiously. Though they agree that the sector should do well from a medium-to-long term perspective, various stimulus measures announced by the government and the sops by vehicle financiers hold key for the demand revival for the auto sector.
"The 32-day festival season, which starts from Navratri and ends with Diwali, retails around 1.8-2.0x normal month sales. We factor in flat growth YoY for the two-wheeler industry retails for the 32-day festival season. Any disappointment from these levels could mean rising dealer inventories and short-term stock price correction," wrote Jay Kale and Vijay Gyanchandani of Elara Securities in an October 22 co-authored note.