Buckle up! Get ready to explore the Nifty Auto sector, India’s engine on wheels. This index tracks the pulse of the nation’s love for automobiles, from zippy two-wheelers to powerful four-wheelers.

In this blog, discover how to analyse Nifty Auto stocks through factor-based investing methodology.   

What is the Nifty Auto Index?

The Nifty Auto Index is a sectoral index that reflects the behaviour and performance of the Indian automobile sector. Launched in 2011, it includes 15 auto and auto component stocks.

The Nifty Auto index is calculated using the free float market capitalisation method with a base date of January 1, 2004, and a base value of 1000.

Factor Based Analysis of Nifty Auto Stocks 

In this analysis, let’s focus on three essential factors – momentum, value, and quality – to evaluate Nifty Auto stocks.

Here’s a breakdown of each factor:

  • Momentum Factor 

Think of investing in momentum stocks like a care race. A fast car (high-momentum stocks) speeds ahead, while a slow car (low-momentum stocks) lags. The momentum factor strategy involves betting on winners (fast cars) to keep winning and losers (slow cars) to stay behind. Investors buy strong-performing stocks and avoid weak ones.

  • Value Factor 

Picture this: a sale catches your eye, and you spot a fantastic lamp at a fair price. Now, apply that idea to the stock market. This strategy checks if a stock is reasonably priced, just like you would with the lamp.

  • Quality Factor 

Quality factor investment strategy is like building a sturdy home with top-notch materials. Investing in high-quality stocks is similar, focusing on companies with strong financials, reliable management, and sustainable growth. Just as quality raw materials ensure a durable home, these factors aim for a resilient investment portfolio.

The Nifty Auto Stocks are rated from 1 to 5 stars, with 1 being the lowest and 5 being the highest.

Nifty Auto StocksValue FactorMomentum FactorQuality Factor
Ashok Leyland Ltd.⭐⭐⭐⭐
Bajaj Auto Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Balkrishna Industries Ltd.⭐⭐⭐⭐⭐⭐⭐⭐
Bharat Forge Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Bosch Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Eicher Motors Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Hero MotoCorp Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
MRF Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐
Mahindra & Mahindra Ltd.⭐⭐⭐⭐⭐⭐⭐⭐
Maruti Suzuki India Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Samvardhana Motherson International Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Sona BLW Precision Forgings Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐
TVS Motor Company Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Tata Motors Ltd.⭐⭐⭐⭐⭐⭐⭐⭐⭐⭐
Tube Investments of India Ltd.⭐⭐⭐⭐⭐⭐⭐

Note: The above auto stock data is from February 6, 2024. The lists of auto stock provided above are purely for educational purposes. These are not stock recommendations. Consult your financial advisor or do your own research before investing. 

Conclusion

In conclusion, exploring the Nifty Auto sector involves understanding its dynamic stocks through a factor-based investing approach. Investors can navigate this engine on wheels by analysing momentum, value, and quality factors. Before making investments, either seek advice from your financial advisor or conduct thorough research on your own.

FAQs

When did the Nifty Auto index Launch?

The Nifty Auto was launched on July 12th 2011.

Which auto stock has the highest weightage in the Nifty Auto Index?

Tata Motors has the highest weight of 17.25% in the Nifty Auto Index as of February 16th 2024.

How often is the NIFTY Auto index rebalanced?

The Nifty Auto Index is rebalanced on a semi-annual basis. The cut-off date is January 31 and July 31 of each year.

Does BSE have an alternative to Nifty Auto?

The S&P BSE Auto, a special index on the Bombay Stock Exchange (BSE), reflects the Nifty Auto index, having almost the same companies as its components.