India's auto, component stocks drop as proposed 'Green' tax fails to impress

Gna Axles

27/01/2021 05:48

** Indian auto and ancillary stocks fall as much 3% as
India's road transport ministry on Monday after markets closed
proposed tax on old vehicles to phase out unfit, polluting
vehicles  urn:newsml:reuters.com:*:nFWN2K00HP
    ** The Nifty auto index  .NIFTYAUTO  dips 0.3%; Indian
markets were closed on Tuesday for a national holiday      
    ** The ministry said it proposes a "Green" tax on private
vehicles older than 15 years, transport vehicles older than 8
years 
    ** "Disincentivizing usage of old vehicles is only an
indirect way to boost new vehicle sales. A more direct scrappage
incentive scheme would have been a bigger positive catalyst," 
says Amit Kumar Gupta, Portfolio Manager, Adroit Financial
Services Pvt. Ltd
    ** Shares of truck makers Eicher Motors  EICH.NS , Tata
Mortors  TAMO.NS , Ashok Leyland  ASOK.NS  fall between 1% to 3%
    ** Auto component stocks GNA Axles  GNAA.NS , Motherson Sumi
 MOSS.NS , Bharat Forge  BFRG.NS  were down 0.6% to 3% 
    ** "The cost rise wouldn't be material enough to force fleet
operators to move to younger vehicles. While the green tax may
not spur demand for new vehicles on its own, it can supplement
the expected scrappage scheme by deterring purchase of older
vehicles," Motilal Oswal said in a note
    ** Mahindra & Mahindra  MAHM.NS  gains 1%, while India's
leading car manufacturer Maruti Suzuki  MRTI.NS  inches up 0.25%
    ** India's auto sector is recovering from poor demand and
government-imposed lockdowns to curb spread of the coronavirus
outbreak
    ** The Nifty auto index had gained 11.5% in 2020

 (Reporting by Nallur Sethuraman in Bengaluru)
 ((Sethuraman.NR@thomsonreuters.com; (+91 8061822737); Reuters
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))