Auto stocks tumble as sops go
Automobile stocks are on the slump today, led by M&M, which is amongst the top losers on the BSE currently. Down almost 2% at Rs.1235, the stock hit an intra day low of Rs.1225. The rest in the pack – Tata Motors, Ashok Leyland, Maruti, Bajaj Auto, all are down.
It was widely expected that the Govt will extend the excise duty cuts beyond today, 31st Dec for the auto sector but that did not happen. Starting tomorrow, these excise duty sops will go. For small car, two-wheelers and CVs, the excise duty was reduced to 8% and it will now go back to 12%. For SUVs, the duty cut was at 24% and that will go up to 30%, large cars will rise from 24% to 27% and mid-size cars from 24% to 20%. This will make the vehicles costlier but the sops were costing the ex-chequer around Rs.2500 crore per month. Given the target of the Govt to bring in the fiscal deficit to 4.1% of the GDP, this withdrawal of excise duty cut did not come as a surprise.