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Tata Motors drops nearly 10% over shortage of semiconductors
Tata Motors warned that a worsening chip shortage would hit its Jaguar Land Rover unit.
Tata Motors shares dropped as much as 10 per cent, the biggest intraday slip in nearly three months, after it said that the semiconductor supply shortage would hurt and impact Jaguar Land Rover's performance. Jaguar Land Rover, of which Tata Motors is the parent company, said the global semiconductor shortage will affect sales, adding that deliveries in the second quarter will be 50 per cent worse than initially thought.
The shortage of automotive chips, which began in December last year as consumer demand for personal devices soared amid pandemic lockdowns, has threatened to slash $110 billion in sales from the car industry, consulting firm AlixPartners forecast in May. It has also forced auto manufacturers to overhaul the way they get the electronic components that have become critical to contemporary vehicle design. “The chip shortage is presently very dynamic and difficult to forecast. We expect some level of shortages will continue through to the end of the year and beyond,” Jaguar Land Rover said, according to Bloomberg.
Meanwhile, markets closed in the red zone on Tuesday as investors awaited the impact of the gradual opening up of the economy amid the second wave of the coronavirus pandemic. The BSE S&P Sensex closed down by 19 points or 0.04 per cent at 52,861 and the Nifty 50 also settled lower by 16 points or 0.1 per cent to 15,818.
Sectoral indices at the National Stock Exchange were mixed with Nifty auto down by 1.7 per cent, PSU bank by 1.2 per cent and IT by 1 per cent. However, Nifty financial service and private bank gained by 0.9 per cent each.
Also, Mahindra & Mahindra and Maruti Suzuki dropped by 1.2 per cent each. Tech Mahindra lost by 2.3 per cent, Tata Consultancy Services by 1.4 per cent, Infosys and Nestle India by 1.1 per cent each and Reliance Industries by 1 per cent. On the other hand, UltraTech Cement gained by 3.2 per cent to ₹6,937.05 per share. HDFC Bank, IndusInd Bank, Bajaj Finance, Bajaj Finserv and Tata Steel also were in the green terrain.
(With agency inputs)
