Nifty Auto (NIFTY AUTO) live share price today at NSE

The Nifty Auto Index - A Brief Introduction

The Nifty Auto index is a sectoral index launched on 12th July 2011 under the Nifty brand. It tracks the performance of the 15 publicly traded companies representing the auto sector of the economy, like 4-wheelers, 2 & 3-wheelers, auto ancillaries, and tyres. The Nifty Auto index is a group of auto stocks representing the real-time movement and sentiment of the auto sector through their aggregate value based on the free-float market capitalisation method. 

By looking at the Nifty Auto index chart, investors can gauge the outlook of the automobile and related sectors and extract useful insights. The index is a benchmark for investors to assess the general trend and real-time health of the automotive sector, positioning it as the primary tool for sector analysis. 

1. The Nifty Auto is a sectoral index that tracks the performance of the Indian automobile sector. 
2. It represents 15 publicly traded auto companies listed on the National Stock Exchange. 
3. Using the Nifty Auto index, investors can gauge the overall sentiment or trend of the automobile sector.

Indian Auto Sector - A Brief Overview

The Indian automotive sector plays a pivotal role in shaping economic growth. With the growth of income in young hands and rising aspirations in India, the auto sector has seen a surge in vehicle demand, especially in the 4-wheeler and 2-wheeler segments. In December 2024, the passenger vehicle production in the country stood at 19,21,268 units, and during the FY 2024, the production was 28.43 million units. 

Nowadays, many auto manufacturers are shifting towards the electric vehicle segment to meet the changing consumer demand and market needs.  As per the report of IBEF, by 2030, India is expected to become the largest EV market. Another report by India Energy Storage Alliance stated that the Indian EV market is likely to increase at a CAGR of 36% until 2026.

Nifty Auto Index - Formula & Calculation

The Nifty Auto index is constituted using the free float market capitalisation method, which entails calculating the market cap of stocks while considering only those shares available for public trading. The equities included in the index are ranked according to their assigned weights, meaning that the stock with a higher market cap has more influence on the index. 

Nifty Auto Index Formula = Free-float market capitalisation/(base index value*base market capitalisation) 

Each index component influences the index's movement, and the ranking of these components is changed or replaced with another stock if required after the semi-annual review of the index.  This review occurs semi-annually, with cutoff dates being 31st January and 31st July. While reviewing the index, the average data for the past six months up to the cutoff date is considered. 

1. The Nifty Auto index is constituted using the free float market capitalisation method. 
2. The companies in the index are ranked according to their assigned weights. 
3. Nifty Auto Index is subject to a semi-annual review, and the cutoff dates are 31st January and 31st July. 
4. The index review is carried out based on the average data of the past six months ending on the cutoff dates. 

Eligibility For The Nifty Auto Index Constituents

1. Companies should be a part of the automobile sector. 
2. Companies must be listed on the National Stock Exchange of India. 
3. Companies must have a listing history of at least one month and a trading frequency of 90%. 
4. The selection of 15 index constituents must be based on their free-float market capitalisation method. 

5. No single stock should have a weightage of more than 33%, and the weightage of the top 3 stocks cumulatively shall not be more than 62% at the time of rebalancing. 

Nifty Auto Index - Benefits of Investing

Diversification 

The Nifty Auto index provides diversification benefits because the invested amount is distributed among its constituents, leading to risk minimisation.  

Convenience 

Stock market investing is a complex activity. Researching and analysing every target stock can be cumbersome because it requires a lot of knowledge and skill. However, investing in indexes such as Nifty Auto allows you to gain exposure to high-quality stocks without performing complex analysis. 

Knowledge enhancement 

By investing in the Nifty Auto index, you can track and analyse the impact of various events on your investments. This helps them gain valuable insights into the auto sector and its factors. 

How can I invest in the Nifty Auto index?

Since Nifty Auto is a market index and not a financial instrument, investors can not directly invest in it. However, certain investing options can be implemented to invest your money in the Nifty Auto index. Here are some major benefits that entice investors to invest in the index through these methods:

Direct investment in index constituents 

This method includes identifying and investing in the Nifty Auto index stocks. For example, Mahindra and Mahindra have the highest weight (24.24%) in the index. So, you will have to create a portfolio in which Mahindra and Mahindra (M&M) hold the same weight as it holds in the Nifty Auto index. This process has to be applied to every stock in your portfolio so that you can replicate the index's performance manually. 

Index funds or Exchange Traded Funds (ETFs) 

Exchange Traded Funds are financial instruments that follow the composition of the Nifty Auto index and allow investors to invest a small sum of capital at regular intervals and get exposure to the returns generated from the index. These funds can also be traded on the stock exchanges just like equity securities. 

Similarly, index funds or mutual funds are investment vehicles that are managed by experienced fund managers who are responsible for investing your capital wisely in market indexes such as the Nifty Auto. Index funds are similar to ETFs. However, ETFs can be traded on stock exchanges, whereas index funds are non-tradable instruments. 

 F&O Trading 

You can also invest in the Nifty Auto index by buying and selling derivative contracts for the index.

Nifty Auto Index - Top 5 Constituents

The Nifty Auto index comprises 15 auto sector stocks, which are dominant players in the sector. Here are the top 5 stocks of the Nifty Auto index.

Mahindra & Mahindra Ltd. 

Mahindra & Mahindra Ltd. (M&M) is one of the most significant companies in the Mahindra Group portfolio. M&M Limited started as a steel trading company with its inception in 1945. Today, Mahindra & Mahindra is a multinational conglomerate that operates in 100 countries. It offers its goods and services in key industries such as automotive, logistics, hospitality, real estate, and financial services etc.

Tata Motors Ltd. 

Tata Motors Limited is a multinational conglomerate in the Tata Group. It was established in 1945 by Jamshedji Tata and was then known as Tata Engineering and Locomotive Company (TELCO). The current business of Tata Motors is spread over 3 business segments: passenger vehicles and commercial vehicles, and it also owns and operates the luxury car brand Jaguar. 

Maruti Suzuki India Ltd.

Maruti Suzuki India Limited (MSIL) is the largest car manufacturer in India, and it is especially known for its pocket-friendly and fuel-efficient cars. It is a subsidiary of the Suzuki Motor Corporation in Japan. 

The first car launched by Maruti Suzuki India Limited (MSIL) was the Maruti 800 in 1983, and since then, it has created a portfolio of 16 car models spread across 150 variants. It was established as a joint venture between Maruti Udyog Limited and Suzuki Motor Corporation in Japan in 1981. 

Bajaj Auto Ltd. 

Bajaj Auto Limited is the flagship company of the Bajaj Group. It was established under the Companies Act 1956 and is located in Mumbai. Bajaj Auto is known for manufacturing high-quality, durable two-wheelers for global markets. The organisation's portfolio includes the famous Pulsar series, Dominar, CT, Avenger, and other prominent two-wheelers.

Eicher Motors Ltd. 

Eicher Motors Limited was established by Vikram Lal in 1948. It is the parent organisation of the middle-weight motorcycle manufacturer Royal Enfield (RE). In addition to Royal Enfield, Eicher Motors Limited also has a JV with AB Volvo - Volvo Eicher Commercial Vehicles Limited (VECV) to modernise commercial vehicles in India and other developing countries. 

Key Takeaways on Nifty Auto Index 

• The Nifty Auto index is a prominent tool for investors to analyse the automotive sector and make informed investment decisions.
• The index was launched on 12th July 2011 with a base date and base index value of 1st January 2004 and 1000, respectively. 
• It tracks the behaviour and performance of 15 NSE-listed companies that operate in the automobile sector.
• The Nifty Auto index is constituted using the free-float market capitalisation method. It represents the aggregate free-float market value of all the index constituents..