Auto stocks ended on a mixed note in the stock market today even as the budget had a few proposals that investors believe could be detrimental to the sector's fortunes.
Shares of Mahindra & Mahindra (M&M) firmed up settled 2.71% higher at Rs 676.95 over the previous close. Maruti Suzuki also recovered from its early losses and ended the session with a mild 0.52% gain at Rs 1,373.65.
However, others like Tata Motors, Bajaj Auto and Hero MotoCorp ended the day in the negative zone.
Tata Motors lost 0.93%, Bajaj Auto shed 0.88% and Hero Moto fell by 0.27%.
Inventure Growth and Securities Research Head Milan Bavishi said, "Auto companies M&M and Maruti traded in green as it is expected that car companies will increase vehicle prices post rise in excise duty and thus pass the entire burden to customers. This clearly shows that these companies are confident that the entire hike will be absorbed as the demand is strong."
Sentiment was poor with the broader market benchmark Sensex finishing the day 209.65 points lower at 17,466.20 in a highly choppy trading session.
"Going ahead, budget proposals will be negative for auto sector in view of increase in excise duty," Bonanza Portfolio Senior Vice President Rakesh Goel said.
Finance Minister Pranab Mukherjee today announced raising of excise duty to 12% from 10% at present.
Excise duties for petrol cars with engines under 1,200 cc and diesel cars with engine capacity under 1,500 cc, but the length exceeding four metres have been increased to 24% from 22% and a fixed duty of Rs 15,000.
With an increase in the excise duty on all products in the Budget for 2012-13, car makers like Maruti Suzuki, Mahindra & Mahindra will hike prices of their vehicles.