India Stocks: Indian shares drop as Bajaj Auto's festive sales warning adds to gloom

MRF

17/10/2024 06:16

(Adds analyst quotes, details on market and updates share
levels)
    By Hritam Mukherjee
       Oct 17 (Reuters) - Indian shares dropped on Thursday as
motorcycle maker Bajaj Auto's warning of weak festival season
sales rippled through the industry, adding to the pressure of
high stock valuations and the exodus of foreign funds.
    The Nifty 50 index  .NSEI  dropped 0.6% at 24,814 points as
of 10:25 a.m. IST, while the S&P BSE Sensex  .BSESN  fell 0.4%
to 81,155.
    Bajaj Auto  BAJA.NS  slumped 10%, set for its worst day
since March 2020, after it said it expects festive season sales
growth of just 3% to 5%, well below expectation of at least 8%.
    The warning from Bajaj, the first automaker and also major
consumer company to report quarterly results, added to worries
that high inflation, especially in food prices, has forced
consumers to limit more expensive purchases in the festival
season.
    Auto stocks  .NIFTYAUTO  sank 3%, with Bajaj's bigger
two-wheeler rivals Hero MotoCorp  HROM.NS  and TVS Motor
 TVSM.NS  down by about 5% each.
    Tyre-makers CEAT  CEAT.NS , MRF  MRF.NS  and Apollo Tyres
 APLO.NS  fell 0.4% to 2%, while auto-focussed lender Shriram
Finance  SHMF.NS  slipped 1.6%.
    Eleven of the 13 major sectors dropped, while the
domestically-focussed small-caps  .NIFSMCP100  and mid-caps
 .NIFMDCP100  down 0.3% and 0.8% respectively.
    "Bajaj's outlook has definitely disappointed investors, who
already were unhappy with some already underwhelming large-caps
earnings," said Abhishek Goenka, founder and CEO of IFA Global.
    Added to that, foreign investors have diverted their funds
to China, leading to domestic outflows of $8.1 billion so far in
October, the highest since March 2020. They were net sellers for
the thirteenth straight session on Wednesday.
    That has led to questions of how long will domestic
investors have to support the markets, Goenka said.
    Reports from marquee companies, including Infosys  INFY.NS ,
Axis Bank  AXBK.NS  and Nestle India  NEST.NS , later in the day
will be in focus.
    Meanwhile, Hyundai Motor India's  HYUN.NS  record $3.3
billion initial public offering was subscribed 43% as of 10:23
a.m. IST on its final day of bidding. 

 (Reporting by Hritam Mukherjee in Bengaluru; Editing by Rashmi
Aich and Savio D'Souza)
 ((Hritam.Mukherjee@thomsonreuters.com; X: @MukherjeeHritam;))