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Nifty Auto soared over 26% in the last one year; Is auto the next IT in India?

20 September 20236 mins read by Angel One
The upcoming festive season in India is expected to further boost demand in the auto sector.
Nifty Auto soared over 26% in the last one year; Is auto the next IT in India?
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NIFTY 50 index, which represents the performance of the top 50 companies listed on the NSE, has also displayed substantial growth. Over the past year, NIFTY 50 has witnessed a significant uptick of 14.25%, reaching a commendable level of 20,133.30. This surge is indicative of the overall bullish sentiment in the Indian stock market, driven by factors such as economic recovery, corporate earnings growth, and positive investor sentiment.

Further zooming in, the NIFTY Auto Index is made up of 15 companies listed on the stock exchange. This index specifically focuses on sectors related to automobiles, including 4-wheelers, 2 & 3-wheelers, auto ancillary businesses, and tire manufacturers.

Over the past year, Nifty Auto has surged by an impressive 26.69%, bringing its current level to a substantial 16,563.90. This growth can be attributed to various factors, including the recovery in the automobile sector, increased consumer demand, and positive sentiment surrounding the industry.

With Nifty Auto outperforming Nifty 50 in the past year, it’s time to delve into the future prospects of the automobile industry.

Automobile outlook

Here are the top 10 companies in the automobile sector based on 1-year returns.

S.no. Automobile companies 1 year  return
1 Atul Auto Limited 203.68%
2 Force Motors Limited 174.99%
3 Olectra Greentech Limited 105.62%
4 Escorts Limited 64.26%
5 SML ISUZU Limited 52.11%
6 VST Tillers Tractors Limited 50.54%
7 TVS Motor Company Limited 48.89%
8 Tata Motors Limited 48.13%
9 Bajaj Auto Limited 40.31%
10 Mahindra & Mahindra Ltd 31.31%

India’s auto industry is booming, driven by a growing middle-class and youth population. In March 2023, vehicle production hit 20.04 million units, and the global electric vehicle market is expected to reach USD 1,318 billion by 2028 from USD 250 billion in 2021, creating substantial opportunities for local and international players.

Furthermore, the Indian auto sector is attracting hefty investments. FDI has surged to about USD 34.11 billion, amassed between April 2000 and December 2022. Looking ahead, the Indian government has ambitious expectations, foreseeing the industry securing a remarkable USD 8-10 billion in local and foreign investments by 2023. These investments will fuel innovation and growth, enhancing India’s standing in the global auto market.

Auto Components Sector:

Here are the top 10 companies in Auto Components Sector based on 1-year return:

 India’s auto component industry is poised to become the world’s third-largest by 2025.

The auto components sector is well-supported in India. It welcomes 100% Foreign Direct Investment (FDI) under the automatic route, beckoning global investors to partake in its expansion. Furthermore, the introduction of Production Linked Incentive (PLI) schemes tailored for the auto and auto components segments is set to drive substantial investments. These initiatives are expected to attract investments totalling around Rs 74,850 crore over the next five years, reinforcing the sector’s growth and global competitiveness.

Overall, India’s auto and auto component industries are set for significant growth, driven by strong demand and substantial investments. These developments offer promising opportunities for businesses, investors, and consumers in the dynamic automotive sector. Additionally, the upcoming festive season in India is expected to further boost demand in the auto sector, adding to its promising future.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. 

 

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