Auto stocks extended their decline for a third straight session on Friday, dragged by concerns over a spike in prices and disruptions in liquefied supplies amid escalating geopolitical tensions.
The Nifty Auto index fell 2.5 per cent during the session and was trading at 24,512 at 11.28 am, close to the day’s low of 24,451.70, compared with the previous close of 25,098.
The index had already declined more than 3 per cent in the previous trading session and has now corrected nearly 10 per cent from its closing level of 27,076.4 recorded on March 6, 2026.
Selling pressure was broad-based with all constituents trading in negative territory. Bharat Forge, Ashok Leyland, , Samvardhana Motherson International and Hero MotoCorp emerged as the top losers, falling close to 5 per cent.
Other major names such as Mahindra and Mahindra, Maruti Suzuki India, Bajaj Auto and Eicher Motors also traded lower.
Brokerages flagged rising risks to production, demand and profitability as higher energy prices and supply-chain disruptions cloud the sector’s outlook. Global brokerage JP Morgan said the ongoing geopolitical conflict and rising commodity prices pose dual risks of production disruptions and cost inflation for the Indian automobile industry. It highlighted potential gas shortages that could lead to factory shutdowns, disruptions to CNG availability affecting consumer vehicle preferences, and higher fuel and raw material costs hurting margins. The brokerage also warned that global shipping disruptions could impact exports, while weakening consumer sentiment may derail the recovery seen after GST cuts.
JP Morgan’s top picks
Despite these risks, it noted that March 2026 retail volumes remain strong so far and that the auto index has already corrected sharply this year. It prefers Maruti Suzuki, M&M and Hero MotoCorp, citing relatively better growth visibility and supportive valuations.
Macquarie, which was earlier constructive on the sector due to expectations of healthy demand and stable margins, now expects Indian auto stocks to underperform broader markets in the near term amid rising uncertainty.
Emkay Global highlighted India’s heavy dependence on imported liquefied petroleum gas through the Strait of Hormuz. It said the country currently has inventory cover of about 20 to 25 days, making supplies vulnerable to prolonged disruptions. The brokerage added that recent hikes in commercial and auto LPG prices could further elevate operating costs across industries.
Elara Capital warned that tyre manufacturers within the auto ancillary space face input cost pressures, estimating that every 10 per cent rise in crude prices could compress margins by about 60 to 80 basis points.
Nomura earlier said that natural gas forms a significant portion of energy consumption in automobile manufacturing and cautioned that shifting to alternative energy sources such as electricity may not be immediately feasible due to machinery constraints and high capital requirements. It noted that smaller component suppliers face limited flexibility in fuel choices and capital allocation, increasing the sector’s vulnerability to supply shocks.
Adding to concerns, the government has tightened fuel distribution norms to conserve supplies, bringing natural gas under essential commodity regulations and prioritising allocation for households and transport fuels such as CNG and LPG. Analysts said the move could create production bottlenecks for industrial users, particularly automakers operating with high capacity utilisation and lean inventory buffers.
Khushi Mistry, Research Analyst at Bonanza, said the decline in auto stocks is largely driven by fears over fuel availability and rising cost pressures. She noted that escalating conflict in West Asia has heightened worries of a fuel-driven inflation surge, with disruptions along key energy supply routes threatening natural gas availability.
Mistry added that natural gas remains critical for several automobile manufacturing processes, especially paint shops and metal treatment operations,