Harshal Dasani, Business Head at INVasset PMS, believes that auto stocks saw corrections led by muted domestic sales in September, and festive demand is likely to pick up in October and November. October year-on-year (YoY) optics turn negative even if dealer bookings, which are building, hold up.
"The monsoon closed 12.6 per cent below normal, the weakest in over a decade, under a developing El Niño, and the rural economy is distressed. Entry-level cars and two-wheelers follow tractors," he said, adding that the rate hike means financing costs rise through the season, and crude near $100 raises the running cost of the product at the same time.
Ather Energy was down 2 per cent, while Royal Enfield maker Eicher Motors Ltd was down a per cent during early trade. Wardwizard Innovations & Mobility was seen in the red during the day. However, Ola Electric Mobility Ltd marched higher during Wednesday's trade. These stocks are down 10 per cent in a month.
In the commercial vehicle space, Ashok Leyland Ltd led the laggards, cracking more than 3 per cent. Tata Motors (TMCV) was down nearly 2 per cent, while Atul Auto and Escorts Kubota also weakened by a per cent each. These stocks have corrected nearly 7-9 per cent in the last one month.
The industry outlook for FY27 remains positive, led by healthy demand momentum, improving rural sentiment, premiumisation, rising EV adoption and new model launches. However, growth is likely to moderate in H2FY27 given the high base of H2FY26, while rising input costs, higher vehicle prices and uneven monsoon conditions could temper the pace of demand recovery, said Axis Direct.
"In the long term, we prefer TVS Motor and Eicher Motors in 2W, and M&M (non-coverage) as a play in the PV/LCV/Tractor segment. We also like Ashok Leyland and Tata Motors (non-coverage) in the CV space, followed by a close watch on Eicher (VECV) for any market share gains," it added.
In the passenger vehicle space, Hyundai Motor India tumbled nearly 3 per cent, while Tata Motors Passenger Vehicle declined 2 per cent. Maruti Suzuki, Mahindra & Mahindra, Force Motors and Olectra Greentech were down a per cent each. These stocks have tumbled up to 11 per cent in the last one month.
September 2026 wholesale dispatches saw strong YoY growth, partly owing to a low base, as GST reduction on 22 September 2025 saw dispatches being delayed towards the last week of September 2025, said BNP Paribas in its report. Retail shipment growth continued to be strong, it said.
"Our proprietary commodity cost index increased for PVs & 2Ws. Steel prices increased in high-single digits, offsetting a modest decline in base and precious metal prices. September 2026 commodity inflation implies an incremental margin headwind for the industry, in our view. Diesel demand continued to rise, freight rates were flattish MoM and CPI inflation grew MoM in August 2026," it said.