Nifty Auto Falls 3.5%: Correction or Bigger Warning?

Nifty Auto fell sharply today, closing at 25,384, down 3.46%. The sell-off was broad-based across two-wheelers, tractors, passenger vehicles and auto ancillaries. The immediate trigger was September sales data. Bajaj Auto's domestic two-wheeler sales fell 12% YoY, while Mahindra & Mahindra's tractor sales declined 21%. Weak rural demand, a patchy monsoon and the delayed start of the festive season added to the concerns. However, the picture is not uniformly weak. Passenger vehicles remained stronger, with Maruti Suzuki reporting 24.4% growth in total September sales and Hyundai Motor India recording its highest-ever monthly sales. The bigger issue for the market is that some headline sales numbers, although positive, were below expectations. Bajaj Auto's total sales grew 5%, supported by a 32% rise in exports, but domestic sales declined 9%. M&M's total auto sales rose 15%, while tractor volumes fell sharply. Technical View The chart looks clearly bearish. Nifty Auto is now trading below its 10, 20, 50, 100 and 200-day moving averages, indicating weakness across multiple time frames. RSI has fallen to around 21.85, putting the index in deeply oversold territory. MACD is also bearish, with negative momentum continuing. The immediate support is 25,000–25,100. A decisive break below 25,000 could open the way towards 24,000–24,300. On the upside, 26,000 is the first important resistance, followed by 26,500. A sustained move above these levels would be required to indicate that selling pressure is easing. My view: Nifty Auto is technically bearish but deeply oversold. A relief bounce is possible, but there is currently no clear reversal confirmation. October festive-season sales will be important in determining whether this weakness remains temporary or develops into a deeper correction. Disclosure: I and my family do not have any position in the shares discussed in this article.