RBI rate hike drags auto stocks; Bajaj Auto, Ashok Leyland among top losers

Shares of Ashok Leyland are the top losers on the Nifty Auto index, declining as much as 3.5%, while shares of Bajaj Auto, Tube Investments, Bharat Forge, Hyundai Motor India, and Hero MotoCorp, fell between 2% to 3% each after the policy announcement. 2 Min Read Shares of Indian Automobile companies fell on Wednesday, October 7, after the monetary policy committee of the Reserve Bank of India hiked interest rates by 25 basis points for the first time in over three years. The Nifty Auto Index is now the top sectoral loser in today's session with all of its constituents trading with losses. Shares of Ashok Leyland are the top losers on the Nifty Auto index, declining as much as 3.5%, while shares of Bajaj Auto , Tube Investments , Bharat Forge , Hyundai Motor India , and Hero MotoCorp , fell between 2% to 3% each after the policy announcement.

Why is a RBI Rate Hike Negative For Auto Stocks? A rate hike from the Reserve Bank of India increases the borrowing costs for consumers, as banks can immediately pass on the higher rates to borrowers by raising the External Benchmark Lending Rate (EBLR) Higher interest rates will also make monthly EMIs more expensive for the vehicle buyers, who may want to defer their purchases in hopes of rates coming down in the future. This may result in a slowdown in dealer inquires and bookings.

The news comes just ahead of the festive season for the auto companies as it was pushed to the third quarter compared to the second quarter last year. In an interaction with CNBC-TV18 on Wednesday, Saharsh Damani of the Federation of Automobile Dealers Association (FADA) said that dealer sentiment remains quite positive, and that 78% of the dealers surveyed by them expect growth over the next three months despite the high base. Damani said that PV inventory levels are higher than desired but that is mainly ahead of the festive season build-up.

Auto stocks had declined last week as well after the September sales numbers were a miss on analyst expectations for most of the companies. Bajaj Auto was the biggest laggard after its sales numbers. Shares of Bajaj Auto and Ashok Leyland are both looking to recover from the lows of the day, now trading 2.5% lower, while those of Hyundai and Bharat Forge are also trading with losses of 1.5% to 2%.

First Published: Oct 7, 2026 11:11 AM IST Home Market News RBI rate hike drags auto stocks; Bajaj Auto, Ashok Leyland among top losers

Source: CNBC TV18