Auto ancillary stocks took a knock on the bourses on the launch of Tata Motors’ Rs 1-lakh car Nano on Thursday. According to market participants, this would trigger a rate war among vehicle manufacturers. Analysts tracking the auto sector say vehicle manufacturers could exert pressure on auto component manufacturers to reduce prices to meet the competition from lower priced vehicles.

Stocks such as Ucal Fuel, MICO, Sona Koyo Steering Systems, Gabriel, Munjal Showa, Sundaram Fasteners, Rico Auto, IP Rings, SKF Bearings, Bimetal Bearings, Apollo Tyres, MRF, and Amara Raja Batteries witnessed selling pressure on the back this fears, say analysts.

However, some believe that this is a temporary phenomenon and auto ancillary units would prosper along with automobile majors, which could witness a sharp surge in sales numbers once the interest rate scenario turns conducive.

K.S. Badri Narayanan

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