The NIFTY Auto Index is designed to depict the behavior and performance of the Automobile segment of the financial market. The NIFTY Auto Index is made up of 15 tradable, exchange-traded companies. The index represents auto-related sectors like Automobiles 4 wheelers, Automobiles 2 & 3 wheelers, Auto Ancillaries and Tyres. The index has a base date of 1 January 2004 indexed to a base value of 1000.
Like its elder cousin Nifty 50, the NIFTY Auto Index is also calculated using the free float market capitalization method. The index level reflects the total free float market value of all stocks in the index relative to a particular base market capitalization value. The index represents about 6.65% of the free float market capitalization of the stocks listed on NSE and 92.92% of the free float market capitalization of the stocks forming part of the Automobiles sector universe as on December 30, 2011.
The NIFTY Auto Index can be used to benchmark fund portfolios, launching of index funds by mutual funds, ETFs, and structured products.
Nifty Auto Index Re-Balancing
Nifty Auto Index is re-balanced on semi-annual basis with the cut-off dates being 31 January and 31 July of each year. What this means is that for semi-annual review of indices, average data for six months ending the cut-off date is considered. Four weeks prior notice is given to market from the date of change.
Nifty Auto Index: Key Drivers
- Shares of four-wheeler companies such as Maruti, Ashok Leyland, and Mahindra & Mahindra have risen by up to 50% this year on the bourses as sales improved amid easing semi-conductor shortages and increased demand.
- Except for two-wheelers, the rest of the auto industry is extremely sensitive to changes in the overall economic outlook and interest rates due to the size of its ticket. Consumer sentiment is important in high-priced purchases. Furthermore, the outlook for commercial vehicles is influenced by general economy.
- Automobiles are either a user’s discretionary purchase or used for economic purposes. The auto industry is cyclical in nature, with periodic downturns. Economic activity, interest rates, available financing options, wage/salary growth, and the regulatory environment all influence cycle sensitivity.
Nifty Auto Index: Auto Eco-System
- Original Equipment Manufacturers (OEMs) are the big players in automotive ecosystems. Naturally, they have an advantage and bargaining power than the other players. Maruti Suzuki, Bajaj Auto, and other OEMs are examples.
- The auto ancillaries are vendors of different components to OEMs and are part of the ecosystem. There are numerous auto ancillaries that produce tyres, engines, fasteners, forging components, crankshafts, batteries, and so on. Motherson Sumi, Sundram Fasteners, Gabriel India, Exide Industries, and MRF are among the listed auto ancillaries.
Nifty Auto Stocks Weightage
In terms of weightage, the top companies in the Nifty Auto Stock list are Mahindra & Mahindra (19.93%), Maruti Suzuki India (19.20%), Tata Motors (13.44%), Bajaj Auto (8.46%), and Eicher Motors (7.45%).
Nifty Auto Stock List
|Company Name||Industry||Symbol||Share Price (INR)||Weightage|
|Maruti Suzuki India Ltd.||Automobile and Auto Components||MARUTI||9209.75||20.11%|
|Mahindra & Mahindra Ltd.||Automobile and Auto Components||M&M||1297.05||19.22%|
|Tata Motors Ltd.||Automobile and Auto Components||TATAMOTORS||447.25||12.92%|
|Eicher Motors Ltd.||Automobile and Auto Components||EICHERMOT||3622.25||7.72%|
|Bajaj Auto Ltd.||Automobile and Auto Components||BAJAJ-AUTO||3768||7.49%|
|Hero MotoCorp Ltd.||Automobile and Auto Components||HEROMOTOCO||2790.3||5.88%|
|Ashok Leyland Ltd.||Capital Goods||ASHOKLEY||165.1||4.31%|
|Tube Investments of India Ltd.||Automobile and Auto Components||TIINDIA||2649.25||4.29%|
|TVS Motor Company Ltd.||Automobile and Auto Components||TVSMOTOR||1041.55||3.77%|
|MRF Ltd.||Automobile and Auto Components||MRF||92868.45||3.37%|
|Bharat Forge Ltd.||Capital Goods||BHARATFORG||784.75||3.24%|
|Balkrishna Industries Ltd.||Automobile and Auto Components||BALKRISIND||2031.45||2.70%|
|Bosch Ltd.||Automobile and Auto Components||BOSCHLTD||17341.6||2.49%|
|Sona BLW Precision Forgings Ltd.||Automobile and Auto Components||SONACOMS||562.2||1.55%|
|Escorts Kubota Ltd.||Capital Goods||ESCORTS||2000.6||0.94%|
Nifty Auto Stock Index Vs Nifty 50
Nifty Auto Stock List: Eligibility Criteria
- Companies should form part of NIFTY 500 at the time of review. In case, the number of eligible stocks representing a particular sector within NIFTY 500 falls below 10, then the deficit number of stocks shall be selected from the universe of stocks ranked within the top 800 based on both average daily turnover and average daily full market capitalization based on previous six months period data used for index rebalancing of NIFTY 500.
- Companies should form a part of the Automobiles sector.
- The company’s trading frequency should be at least 90% in the last six months.
- The company should have a 6-month listing history. If a company files for an IPO, it will be eligible for inclusion in the index if it meets the normal eligibility criteria for the index for a 3-month period rather than a 6-month period. Final selection of 15 companies shall be done based on the free-float market capitalization of the companies.
- The weightage of each stock in the index is calculated based on its free-float market capitalization such that no single stock shall be more than 33% and weightage of top 3 stocks cumulatively shall not be more than 62% at the time of rebalancing.
- Companies will be included if free-float market capitalization is at least 1.5 times the free float market capitalization of the smallest index constituent in the respective index.
Nifty Auto Index Stock List: Eligible basic industries
The following industries are eligible to be considered when forming companies for inclusion in the Nifty Auto Index List:
- 2/3 Wheelers
- Auto Components & Equipment’s
- Batteries – Automobile
- Castings & Forgings
- Commercial Vehicles
- Gas Cylinders
- Passenger Cars & Utility Vehicles
- Trading – Auto Ancillaries
- Trading – Automobiles
- Tyres & Rubber Products
Automotive industry is an important sector in Indian economy and it weighs nearly 6% in Nifty 50 index. Accordingly, Nifty Auto is an important index but one should not pick Nifty Auto stocks purely on the basis of past returns. The Auto industry is highly cyclical in nature and depending on research and risk appetite one should invest.