auto stocks remained resilient on tuesdays trade a day after the countrys fair trade regulator competition commission of india cci levied penalties ofrs 2544 crore on 14 carmakers with some brokerages telling their clients to use any dip in stocks as an opportunity to accumulate them bse auto index closed up 003 at 17106 on tuesday trade even tata motors stock closed up 09 at rs 513 which has absorbed the largest pie of penalty amount market experts said hefty penalties did not impact auto stocks because one the rationale and methodology adopted by the watchdog in taking its decision appeared unsound and two it closed at least two cartelisation cases in recent times after failing to find evidence last few judgments of our antitrust regulator on companies particularly in cement and tyre sectors have created much noise but unfortunately they could not reach a concrete conclusion this is the chief reason why auto stocks have remained largely unaffected despite severe penalties on listed players such as tata motors maruti suzuki and mahindra mahindra said a domestic fund manager who requested not to be identified the cci had on monday imposed the penalty on the ground that automakers usually sell spare parts only through their dealer network which results in high and arbitrary prices most carmakers would now move the competition appellate tribunal hence there wont be any negative impact on their earnings in the near term when the cci imposed penalties on the cement industry on account of cartelisation companies appealed to the higher appellate tribunal and it did not affect their earnings they had to deposit 10 of penalty amount imposed by the regulator when they moved the appellate tribunal so depositing 10 of the penalty amount may be the worse case scenario for carmakers in the near term another reason why the market did not get unnerved is that the regulator imposed penalties due to perceived unfair practice in the spare part sales which are not a core business for automakers and account for only 610 of their revenues basudep banerjee auto analyst with antique stock broking said ccis methodology of calculating the penalty is not convincing the regulators methodology of levying penalty on tata motors based on consolidated sales which include the sales of jaguar land rover shows that logic seems to have taken a back seat he said a number of investors would use softness in the auto stocks to accumulate as after the recent runup in the auto stocks it became tough to justify stock valuations on the basis of expected earnings of fy16 banerjee said analysts said investors would turn wary only if automakers lose their case in the appellate tribunal by ashutosh shyam et bureau published on aug 27 2014 at 0841 am ist telegram facebook copy link be the first one to comment comment now comments comment now read comment 1 all comments post post find this comment offensive choose your reason below and click on the submit button