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Stocks of frontline automobile companies are expected to move in a narrow range next week due to lack of stock-specific triggers and in run-up to the Budget for 2013-14 (Apr-Mar). Finance Minister P. Chidambaram will announce the Budget on Feb 28. A mild negative reaction in the auto stocks could be seen as oil marketing companies yesterday announced hike in prices of diesel and petrol by nearly 0.5 rupees and 1.5 rupees, respectively. The auto industry that has been facing a slowdown in demand for over a year now has its hopes pinned on the Budget for a cut in excise duty and other measures for restoring growth in the sector. It has demanded a cut in excise duty on sub-four-metre vehicles to 10% from existing 12% and on larger vehicles to 22% from over 25% now. Society of Indian Automobile Manufacturers has also opposed the proposed additional duty on diesel cars, which it feels will ground a segment that is at least doing well in an otherwise subdued environment.
The petroleum ministry had proposed a hike in excise duty on cars run on diesel in a bid reduce the demand for the fuel, which is highly subsidised by the government. With the hike in diesel prices, any separate tax on diesel vehicles is unexpected, adding that high end utility vehicles, however, could be taxed separately. On Feb 11, the Society of Indian Automobile Manufacturers had said the industry will miss all forecasts set for 2012-13. The latest forecast made in January, passenger car sales were to grow 0-1% in 2012-13. We expects Hero MotoCorp Ltd's volumes to remain subdued over next 2-3 months on account of high level of inventory.
Stocks of frontline automobile companies are expected to move in a narrow range next week due to lack of stock-specific triggers and in run-up to the Budget for 2013-14 (Apr-Mar). Finance Minister P. Chidambaram will announce the Budget on Feb 28. A mild negative reaction in the auto stocks could be seen as oil marketing companies yesterday announced hike in prices of diesel and petrol by nearly 0.5 rupees and 1.5 rupees, respectively. The auto industry that has been facing a slowdown in demand for over a year now has its hopes pinned on the Budget for a cut in excise duty and other measures for restoring growth in the sector. It has demanded a cut in excise duty on sub-four-metre vehicles to 10% from existing 12% and on larger vehicles to 22% from over 25% now. Society of Indian Automobile Manufacturers has also opposed the proposed additional duty on diesel cars, which it feels will ground a segment that is at least doing well in an otherwise subdued environment.
The petroleum ministry had proposed a hike in excise duty on cars run on diesel in a bid reduce the demand for the fuel, which is highly subsidised by the government. With the hike in diesel prices, any separate tax on diesel vehicles is unexpected, adding that high end utility vehicles, however, could be taxed separately. On Feb 11, the Society of Indian Automobile Manufacturers had said the industry will miss all forecasts set for 2012-13. The latest forecast made in January, passenger car sales were to grow 0-1% in 2012-13. We expects Hero MotoCorp Ltd's volumes to remain subdued over next 2-3 months on account of high level of inventory.
