Summary of this article
Nifty Auto rallies while broader Nifty 50 index declines.
Robust Q1 earnings from Bajaj Auto boost investor confidence.
Sector ignores rising crude prices amid strong vehicle demand.
Benchmark indices continued to trade under pressure on July 23 for the fourth straight day. The Nifty 50 slipped to an intraday low of 23,876.20, indicating a decline of nearly 2 per cent in four sessions. On the other hand, the Nifty Auto extended gains for the third straight session on July 23, the Nifty Auto touched an intraday high of 27760.65, gaining 1.5 per cent. Notably, the index has gained over 2 per cent in its three-session winning streak.
Hero Motocorp, Bosch and Bajaj Auto Lead Nifty Auto Gainers
On July 23, as many as 12 out of the 15 constituents of the Nifty Auto traded in the green. Shares of Bosch, Bajaj Auto and Hero Motocorp led the gains as they traded higher by 3.85 per cent, 2.96 per cent and 2.63 per cent, respectively, on the NSE. Index heavyweights such as Mahindra and Mahindra, and Bajaj Auto traded higher by 2.06 per cent and 2.63 per cent respectively.
Why Is Nifty Auto Gaining
The rally in auto stocks is backed by strong first-quarter earnings growth from major auto manufacturers, along with several other factors. So far, two major auto firms have announced their first-quarter results.
Bajaj Auto reported a 46 per cent year-over-year increase in its consolidated Profit After Tax in Q1FY27 (PAT), reaching Rs 3,225 crore. The company’s consolidated revenue from operations also surged by 65 per cent YoY to Rs 20,870.23 crore in the quarter ended June 30,2026. TVS Motor Company also posted a 51 per cent YoY growth in PAT as it rose to Rs 1,174 crore in Q1FY27. The company’s revenue from operations grew by 38 per cent YoY to reach Rs 13,896 crore.
The automobile sector is also showing independent strength by bucking the broader market trend even as the Nifty 50 and other indices continue to face selling pressure from escalating Middle East tensions and a spike in Brent crude prices.
While rising crude oil prices tend to negatively impact auto sentiment due to anticipated fuel cost burdens on consumers, the current rally shows that investors are looking past these short-term cost concerns. The companies are also expected to benefit from the transition toward electric vehicles and potential government policy incentives.
Industry experts point to solid underlying fundamentals supporting this trend. Highlighting the broad strength in the market, Arun Agarwal, VP Fundamental Research at Kotak Securities, noted the initial performance.
"Overall demand remains strong across all segments. Automotive companies reported robust volume growth across segments in Q1FY27," Agarwal said.
Agarwal also highlighted the specific financial drivers for some of the top-performing index heavyweights.
"Further, Bajaj Auto and TVS Motors reported better than expected Q1FY27 earnings, led by higher than expected operating margin," Agarwal said.
Looking ahead, he cautioned that the current pace might see some normalisation later in the financial year.
"While the demand momentum is expected to be positive, we expect sales volume growth to moderate in H2FY27 amid a higher base," Agarwal said.
Concluding his assessment, he outlined a cautious but optimistic investment approach.
"We are selectively positive on a few stocks in the auto sector," Agarwal said.
