New Delhi, Jan. 9 -- Share prices of most automakers are down 20-30% from year-ago levels. The BSE Auto index has underperformed the broader market since July, with most stocks in the index showing a decline. The steady decline in auto sales in the past six months, including unusual sluggishness during the festive season, has impacted investor sentiment.

Price-to-earnings multiple based on Bloomberg's forecast for FY19 and FY20 has fallen by 10% and 7%, respectively, since mid-December, when hopes of a recovery in demand faded.

The growing pessimism is due to many factors. Apart from the weak rupee and the incessant rise in fuel prices through most part of calendar year 2018, a rise in insurance costs and higher interest rates weighed o...