Mumbai: Auto shares after showing some signs of recovery in the past two sessions following a 4% point cut in Cenvat rate announced by the government, faced fresh spell of selling today after the US Senate failed to reach an agreement on bailout plan for auto industry.
The BSE Auto sector index fell by 4.17% at 2,278.37 points after Maruti Suzkui and Tata Motors led fall.
Trading sentiments turned bearish after reports that $14-billion auto bailout plan in the US Senate collapsed, spurring selling in auto sector stocks on the domestic bourses.
Stock brokers said sharp fall in sales in November by most of the car and two-wheeler makers also had a negative impact on the trading sentiments.
Shares of Tata Motors fell by 5.05% at Rs152.45, while car maker Maruti Suzki lost 4.27% at Rs488.40 on the BSE. Also utility vehicle maker Mahidnra and Mahindra fell by 4.54% at Rs273.30.
Bajaj Auto also turned weak and fell by 3.61% at Rs343.15, while Hero Honda by 2.42% at Rs773.90.
On Sunday, as an immediate measure to encourage additional spending, the government has announced an across-the-board cut of four percentage points in the ad-valorem Cenvat rate, to be effected for the balance part of this fiscal year.
Major auto companies, including market leaders Maruti and Tata Motors, already had cut prices of their vehicles to pass on the benefit to the consumers.