Auto stocks extended their losing streak for the fifth consecutive session on January 13, with the Nifty Auto index declining 0.70% to 27,817. The index has shed more than 3% over the past five trading days, reflecting broad-based weakness across the automotive sector. Despite the recent correction, analysts maintain an optimistic outlook, viewing the decline as a consolidation phase supported by strong structural fundamentals.

Market Performance and Key Movers

The automotive sector witnessed widespread selling pressure, with several major players recording significant losses. The following table highlights the key performers during the session:

Tube Investments of India emerged as the top loser, falling approximately 2% to trade at ₹2,367 per share. Other major automakers including Exide Industries, Uno Minda, Maruti Suzuki, Mahindra & Mahindra, and TVS Motor Company recorded losses exceeding 1% each. Tata Motors Passenger Vehicles and Hero MotoCorp shares declined nearly 1% each, while Ashok Leyland and Eicher Motors traded marginally lower.

Stocks Bucking the Trend

Contrary to the broader sector weakness, several companies managed to post gains during the session:

• Sona BLW Precision Forgings
• Bosch
• Bajaj Auto
• Bharat Forge
• Samvardhana Motherson International

These stocks traded in positive territory with marginal gains, demonstrating selective strength within the automotive ecosystem.

Analyst Perspectives on Market Correction

Market experts attribute the recent decline to near-term profit booking and demand concerns rather than fundamental sector weakness. Siddharth Maurya, Founder & Managing Director at Vibhavangal Anukulakara, emphasized that the correction reflects temporary factors rather than structural issues.

Harshal Dasani, Business Head at INVasset PMS, characterized the recent correction as a consolidation phase, noting that auto stocks have delivered strong returns over the past year. "The medium-term outlook for the auto sector remains constructive, supported by multiple policy and demand tailwinds," he stated.

Tushar Badjate, Director of Badjate Stock & Shares, highlighted the sector's impressive performance trajectory. From the March 2025 low of 19,300, the Nifty Auto index has rallied nearly 40% to 27,555, suggesting significant optimism was already priced into valuations. The recent correction represents valuation rationalization rather than demand stress.

Policy Tailwinds and Growth Drivers

Analysts identify several positive catalysts that could support the automotive sector's recovery:

Dasani noted that potential GST rationalization on automobiles, expectations of interest rate cuts, and income tax relief aimed at boosting disposable income can meaningfully support vehicle demand. Lower financing costs tend to have direct and visible impact on auto sales, particularly in passenger vehicles and two-wheelers.

Investment Strategy and Outlook

Regarding the proposed 500% US tariff concerns, Dasani highlighted that the impact should not materially alter the outlook for Indian auto manufacturers, as India's direct auto exports to the US are limited. Any impact would more likely affect select auto ancillary players supplying components to global OEMs.

Vishnu Kant Upadhyay, AVP-Research & Advisory at Master Capital Services, suggested that "the current correction could offer a buying opportunity for long-term investors, supported by healthy fundamentals and the Government's continued focus on incentives for electric vehicles and hybrid mobility."

Ajit Mishra, SVP of Research at Religare Broking, identified specific stocks displaying relative strength: "Bajaj Auto, Eicher Motors, TVS Motor, M&M, and Maruti are displaying relative strength and can be considered for accumulation on declines."

The consensus among analysts suggests that while near-term volatility may persist amid the ongoing earnings season, the broader structural outlook for the automotive sector remains intact, presenting selective opportunities for long-term investors.

Motilal Oswal Asset Management Company has temporarily halted fresh inflows into its Nifty Microcap 250 Index Fund following discussions with the Securities and Exchange Board of India (SEBI). The company has clarified that this decision stems from regulatory alignment requirements rather than concerns about fund performance or liquidity issues.

Fund Details and Performance

Launched in July 2023, the Motilal Oswal Nifty Microcap 250 Index Fund tracks the Nifty Microcap 250 Total Return Index, which represents 250 companies operating outside the Nifty 500 universe. The scheme currently manages assets worth approximately ₹2,625.60 crore.

Regulatory Alignment Focus

Pratik Oswal, Head of Passive Funds at Motilal Oswal Asset Management Company, emphasized that the fund was launched with proper regulatory approvals. "The Motilal Oswal Nifty Microcap 250 Index Fund was launched with due approval from SEBI. The pause on fresh inflows has been undertaken in consultation with SEBI, as microcap is currently not part of the regulator's formal market-cap classification framework," he explained.

The company stressed that this measure reflects prudent risk management and regulatory compliance rather than any underlying portfolio stress. Oswal clarified that the decision should not be interpreted as concerns about portfolio quality or liquidity constraints.

Impact on Existing Investors

The inflow restriction does not affect current investors in the fund. Key provisions for existing stakeholders include:

• Redemption facilities remain fully operational
• Fund management continues according to stated investment objectives
• No changes to the fund's investment structure or strategy
• Ongoing portfolio management aligned with the underlying index

Industry Context

Historically, mutual fund houses have restricted fresh inflows primarily due to performance concerns arising from overheating in specific market segments. Several major fund houses, including SBI Mutual Fund, Tata Mutual Fund, and Nippon Mutual Fund, have previously closed investment windows for small-cap funds during periods of segment overheating. Additionally, international fund investments have faced caps due to regulatory limits on overseas investments.

Future Outlook

Motilal Oswal AMC confirmed it remains in active dialogue with SEBI regarding the path forward. The company has identified investor protection and regulatory compliance as primary objectives in these ongoing discussions. The asset manager continues to monitor market conditions while maintaining focus on regulatory alignment requirements for the microcap investment category.