Auto stocks skid on petrol price hike

Business

oi-Sunil

By Sunil Fernandes

Published: Thursday, May 24, 2012, 10:05 [IST]

Shares of Maruti Suzuki, Bajaj Auto and Hero Motor Corp lost ground today following the increase in petrol prices. Maruti Suzuki was down 2.55%, while Hero motor Corp was down 1% and Bajaj Auto was down almost 2% at 9.55 am IST.

Sentiments for these stocks turned sour as there is a belief that the hike in petrol prices would hit demand.

The government on Wednesday hiked petrol prices by a record Rs.7.54 per litre as the rupee has staged a dramatic fall in the last few sessions. Oil marketing companies had been bearing the burden and had reported huge losses due to under recovery. Though petrol prices are deregulated, they still require the consent of the government and in the last few months, the government has been unwilling to raise prices.

Auto companies may now see an increased demand for diesel cars, unless the government decides to hike the prices of diesel in its next EGOM meeting due on Friday.

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