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Auto stocks fall as recovery from the covid-19 crisis likely to be prolonged

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Lower oil prices would have normally spurred auto stocks. But not quite, as the crude oil price crash took a heavy toll on India’s auto stocks.

The Nifty auto index dropped 5.3%, more than the 3% slide in the Nifty on Tuesday. The challenges for the auto sector are rising.

Any turmoil in global economies impacts India’s auto sector, which has strong international links. Besides, the oil price crash comes when India’s extension of the lockdown till 3 May had already dampened domestic sentiment.

A report by JM Financial Services Ltd said, “Due to Covid-19, we expect a) June quarter (Q1 FY21) volumes to be impacted by about 60% and b) delay in volume recovery by at least another quarter." This comes following a dismal March quarter when

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