Drought sparks fears for tractor sales

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Tractor maker Mahindra & Mahindra shares fall 1.7 per cent as the growing likelihood of a drought in India threatens to hit rural sales.

Mahindra & Mahindra already saw tractor sales fall 2.4 per cent from the previous month and 4.5 per cent on a year-to-year basis.

Two-wheeler makers also seen at risk: Hero MotoCorp falls 0.4 per cent, while Bajaj Auto loses 0.8 per cent.

Analysts are particularly concerned that drought will hit auto sales during the critical festival season in the second half of the year when companies use promotions to bolster sales.

"To some extent the slowdown in tractor sales of M&M has been factored in, and UVs would provide support," said Yaresh Kothari, an analyst at Angel Broking, referring to utility vehicles.

"The impact of drought would be visible more in the second half of FY13 after festive season for two-wheeler manufacturers."