The Nifty Auto index fell 1,103.40 points, or 4.20 per cent, on Thursday. This sell-off wiped out Rs 1.02 lakh crore in market value. Investors got worried after Bajaj Auto and Mahindra & Mahindra reported September 2026 sales below expectations. New government fuel norms also hit sentiment, making many auto stocks fall.

Auto stocks came under heavy selling pressure on Thursday, with the Nifty Auto index falling 1,103.40 points, or 4.20 per cent, to 25,190.55 during afternoon trade. The index hit an over four-month low on the National Stock Exchange (NSE).

The sell-off came after automobile companies reported their September 2026 sales numbers, with Bajaj Auto and Mahindra & Mahindra (M&M) reporting volumes below analysts' expectations.

Sentiment was also impacted after the Ministry of Power notified the third phase of Corporate Average Fuel Economy (CAFE) norms for passenger vehicles.

The 15-stock Nifty Auto index saw a combined market capitalisation erosion of around Rs 1.02 lakh crore during the session.

Bajaj Auto was the biggest loser among the Nifty Auto constituents, with its shares falling 7.15 per cent to Rs 10,096. The company reported a 5 per cent year-on-year (YoY) increase in total sales to 538,443 units in September 2026. However, the sales number was below the Street's expectations.

Analysts at Jefferies had estimated Bajaj Auto's total sales at around 585,000 units for September. The company had sold 510,504 units in the same month last year.

Bajaj Auto's exports increased 32 per cent YoY to 243,987 units in September 2026 from 185,252 units a year ago. However, domestic sales declined 9 per cent to 294,456 units from 325,252 units in September 2025, weighing on the overall sales performance.

Shares of UNO Minda declined 5.21 per cent to Rs 1,109.10, while Sona BLW Precision Forgings dropped 5.18 per cent to Rs 787.

Maruti Suzuki India fell 4.88 per cent to Rs 11,383, while Bosch declined 4.43 per cent. Samvardhana Motherson International slipped 4.10 per cent during the session.

Mahindra & Mahindra also came under pressure after its September sales numbers fell short of analysts' estimates. M&M reported overall auto sales of 114,874 vehicles in September, representing a 15 per cent YoY increase, including exports. Jefferies had expected the company to report auto sales of around 121,500 vehicles for the month.

M&M's tractor sales declined 21 per cent YoY to 52,100 units in September 2026, compared with 66,111 units in September 2025. Jefferies had estimated tractor sales at around 62,000 units.

In a press release, M&M said the decline in tractor volumes was primarily attributable to the shift in the festive season, which commences in October this year, compared with September last year.

The company also said the comparison was impacted by a higher base in September 2025, which benefited from the implementation of the GST rate cut during that period.

M&M's exports stood at 1,892 units in September, up 62 per cent from the year-ago period. M&M shares declined 4.44 per cent to Rs 2,819 during Thursday's trade.

The selling pressure extended across two-wheeler manufacturers. Eicher Motors declined 3.75 per cent, while TVS Motor Company fell 3.63 per cent. Hero MotoCorp shares slipped 1.67 per cent during the session.

Among other auto stocks, Bharat Forge declined 3.09 per cent, while Tata Motors Passenger Vehicles fell 2.96 per cent. Ashok Leyland dropped 3.01 per cent, and Tube Investments of India declined 2.42 per cent.

Hyundai Motor India was relatively less affected, with its shares falling 0.51 per cent to Rs 2,020.70. The broad-based decline resulted in significant market capitalisation erosion across the automobile sector, with the Nifty Auto index down more than 4 per cent during afternoon trade.

Under the new framework, the fleet average fuel-consumption benchmark will be tightened from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32. This represents a 16.7 per cent improvement in fuel efficiency over the five years.

The framework also raises the reference vehicle weight from 1,082 kg to 1,229 kg. Automakers will have multiple compliance pathways under the new framework.

The new CAFE framework provides for recognition of ethanol-blended petrol, biofuels and compressed biogas (CBG) through a Carbon Neutrality Factor. Battery electric vehicles (BEVs), range-extended electric vehicles, plug-in hybrids, strong hybrids and flex-fuel vehicles will receive "super credits" under the framework.

The new norms are part of the government's broader fuel-efficiency framework for passenger vehicles and will apply from April 1, 2027.