All About Nifty Auto

With this chapter, we’ve officially come to the halfway point of this module of Smart Money. Today, we’re going to be looking at the sectoral index of one of the key industries of the Indian economy - Nifty Auto. And so, without further ado, let’s step into the automotive sectoral index of Nifty.    

What is the Nifty Auto index?

The Indian automotive sector plays an extremely important role, not only in terms of contributing to the GDP, but also in terms of providing employment. With the sector taking on such a crucial role, it is important to have a benchmarking tool that can measure its performance and as well as the performance of its various constituent industries. And that’s exactly what the Nifty Auto Index is for. 

This index features the stocks of companies that operate in the automotive sector. This not only includes manufacturers of automobiles, but also ancillary manufacturers like component and tyre manufacturers. Since the automotive industry in itself is quite a tight-knit group, the Nifty Auto sectoral index is also a very narrow market index.

What are the constituents of Nifty Auto?

The index consists of stocks of 15 different companies operating under the automotive sector. Here’s a quick look at them along with their index weightage as on February 28, 2021.

	Name of the company	Index weightage
1	Amara Raja Batteries	1.50%
2	Ashok Leyland	3.83%
3	Bajaj Auto	10.23%
4	Balkrishna Industries	2.62%
5	Bharat Forge	3.7%
6	Bosch	2.63%
7	Eicher Motors	7.20%
8	Exide Industries	1.92%
9	Hero MotoCorp	8.66%
10	MRF	3.63%
11	Mahindra & Mahindra	15.97%
12	Maruti Suzuki India	18.88%
13	Motherson Sumi Systems	5.31%
14	TVS Motor Company	2.46%
15	Tata Motors	11.97%

Now that you’re aware of the constituents of the index and their respective weightage, let’s take a quick look at the Nifty Auto companies.

1. Amara Raja Batteries

• One of India’s leading battery manufacturers, Amara Raja Batteries is the flagship entity of the Amara Raja Group of companies. 
• The company is involved in the manufacture of VRLA batteries for both automotive and industrial applications. 
• The products manufactured by Amara Raja Batteries are marketed under the ‘Amaron’ brand. 
• The company is a designated OEM (Original Equipment Manufacturer) for several key automotive manufacturers in India including Maruti Suzuki, Hyundai, Ford, Tata Motors, Mahindra and Mahindra, and Honda, among others. 

2. Ashok Leyland

• Established in the year 1948 in Chennai, Ashok Leyland is one of the country’s largest Light Commercial Vehicle (LCV) and truck manufacturers. 
• In addition to those two, the company is also involved in manufacturing buses, generators, engines, and customized defence vehicles as well. 

3. Bajaj Auto

• Incorporated in the year 1945, Bajaj Auto is a two-wheeler and three-wheeler manufacturer headquartered in Pune. 
• The company consistently appears in the top 3 in terms of the number of two-wheelers manufactured in a year. 
• Bajaj Auto enjoys significant brand presence and equity, with the ‘Pulsar’ range of motorcycles garnering exceptional popularity.

4. Balkrishna Industries

• Headquartered in Mumbai, Balkrishna Industries was incorporated in 1987. 
• Since then, the company has been in the tyre manufacturing business. 
• The company’s core business lies in manufacturing off-road tyres for large commercial vehicles such as the ones used for mining, agriculture, and earthmoving. 

5. Bharat Forge

• Bharat Forge is a component manufacturer that has been in existence since 1961. 
• The company’s core business is forging, tool and die manufacturing, design engineering and product development, and testing and validation. 
• Bharat Forge is one of the largest manufacturers and exporters of various auto components.

6. Bosch

• Founded in 1951, Bosch is a multinational entity with multiple business verticals, which includes automotive and mobility. 
• The company is one of the leading suppliers of a plethora of automotive components, automotive technology, and other mobility services. 
• Bosch provides its automotive products and services through 13 of its own subsidiary companies.   

7. Eicher Motors

• Established in 1948, Eicher Motors is one of India’s leading manufacturers of heavy commercial vehicles and motorcycles. 
• The motorcycles are manufactured under the ‘Royal Enfield’ brand, whereas the heavy commercial vehicles are marketed under the ‘Eicher Motors’ brand. 

8. Exide Industries

• Incorporated in 1947, Exide Industries is another major battery manufacturer in India. 
• The company’s product portfolio includes lead-acid batteries for both automotive and industrial uses. 
• Exide Industries manufactures batteries with a wide range of capacities from 2.5 Ah to 20,600 Ah.

9. Hero MotoCorp

• Founded in 1984 as Hero Honda, Hero MotoCorp is a two-wheeler manufacturer in India.
• In fact, the company is the largest in the country and the world in terms of number of vehicles sold. 
• In India alone, Hero MotoCorp has around 46% of the market share, with the ‘Splendor’ range of two-wheelers garnering the maximum amount of goodwill and popularity.

10. MRF

• Incorporated in 1946 in the city of Chennai, MRF is India’s largest tyre manufacturer.
• The company manufactures a wide range of tyres for two-wheelers and four-wheelers. 
• In addition to that, the company also produces several off-the-road (OTR) tyres for an extensive range of commercial vehicles as well. 

11. Mahindra & Mahindra

• Mahindra & Mahindra is an Indian multinational conglomerate that operates under multiple business verticals. 
• One of the core businesses of the company is the manufacture of two-wheelers, passenger vehicles, and commercial vehicles.
• The entity’s product portfolio is extensive and includes SUVs, buses, trucks, electric vehicles, and small commercial vehicles as well.  

12. Maruti Suzuki India

• Maruti Suzuki India is the country’s largest passenger car manufacturer in terms of sales volume and market share. 
• The company is well known for its frugal, fuel efficient, and reliable cars such as the Alto and the Swift.  
• Maruti Suzuki’s product portfolio is extensive with exceptional sales and after sales support. 

13. Motherson Sumi Systems

• Established in 1986, Motherson Sumi Systems is a joint venture between an Indian company - Samvardhana Motherson International and a Japanese entity - Sumitomo Wiring Systems. 
• The company’s core business lies in the manufacture of automotive components, more specifically, automotive wiring harnesses and rear view mirrors. 
• Motherson Sumi is one of the largest providers of automotive parts in India. 

14. TVS Motor Company

• TVS Motor Company is the country’s third largest two-wheeler manufacturer with its headquarters in the city of Chennai. 
• The company manufactures a variety of scooters, motorcycles, mopeds, electric vehicles, and three-wheelers as well. 
• TVS Motor Company enjoys a high level of popularity, thanks to its Scooty Pep and Apache series of two-wheelers. 

15. Tata Motors

• Part of the Tata Group of companies, Tata Motors is the automobile manufacturing division of the multinational conglomerate. 
• The company is quite well known for its passenger cars, trucks, buses, luxury and sports cars, construction equipment and vehicles, and military vehicles. 
• Tata Motors currently owns and operates the Jaguar Land Rover (JLR) range of vehicles. 

Trading in the Nifty Auto index

Unlike the other two indexes that we saw in the previous chapters, trading in the Nifty Auto Index is not possible. This is simply due to the fact that NSE has not launched any derivative contracts with the Nifty Auto index as the underlying asset. Although this might make it seem like there’s very little use for Nifty Auto Index, remember that the indicator is widely used by fund managers to benchmark the performance of their funds with that of the index.   

S&P BSE Auto: The BSE alternative

The S&P BSE Auto is the Bombay Stock Exchange’s very own sectoral index. It is a like-for-like equivalent of the Nifty Auto index. In fact, they’re so similar to each other that almost every single constituent of the Nifty Auto index makes an appearance on the S&P BSE Auto index as well, with the exception of one - Bharat Forge. Instead of Bharat Forge, the S&P BSE Auto index has included Escorts as part of its index constituents. 

Wrapping up

And, that’s a wrap! We’ve gone through yet another major sectoral index. In the next chapter of this module, we’ll be taking a look at the Nifty FMCG index and its constituents. Until then, stay tuned and keep reading Smart Money!  

A quick recap

• The Nifty Auto Index features stocks of companies that operate in the automotive sector. This not only includes manufacturers of automobiles, but also ancillary manufacturers like component and tyre manufacturers. 
• The index consists of stocks of 15 different companies operating under the automotive sector. 
• These stocks include Amara Raja Batteries, Ashok Leyland, Bajaj Auto, Balkrishna Industries, Bharat Forge, Bosch, Eicher Motors, Exide Industries, Hero MotoCorp, MRF, Mahindra & Mahindra, Maruti Suzuki India , Motherson Sumi Systems, TVS Motor Company and Tata Motors.
• Unlike the other two indexes that we saw in the previous chapters, trading in the Nifty Auto Index is not possible. This is simply due to the fact that NSE has not launched any derivative contracts with the Nifty Auto index as the underlying asset. 
• The BSE’s equivalent auto sectoral index is the S&P BSE Auto.
• Almost every single constituent of the Nifty Auto index makes an appearance on the S&P BSE AUTO index as well, with the exception of one - Bharat Forge. Instead of Bharat Forge, the S&P BSE AUTO index has included Escorts as part of its index constituents.