Auto stocks rally! GST effect pushes Mahindra, Tata Motors, Bajaj Auto, Hero MotoCorp shares up

The Nifty Auto index surged by a staggering 764 points in the first half of Monday, led by massive gains in automotive stocks.

Bharat Forge, Ashok Leyland, Samvardhana Motherson, Mahindra & Mahindra, Eicher Motors, TVS Motor Co, Bajaj Auto, Tata Motors, and Hero MotorCorp saw major gains as part of the index.

Among them, Mahindra & Mahindra and Tata Motors also lifted the market benchmark Sensex as two of its constituents. Both gained close to 4 per cent intraday.

The latest Goods and Services Tax (GST) cuts are expected to kick in on September 22, which would significantly lift consumer demand for small cars and two-wheelers under 350cc, according to industry bodies.

According to the new reforms, sub-4-metre cars and two-wheelers under 350cc would see significant discounts after their GST—28 per cent + 1 per cent cess—was slashed to 18 per cent.

ALSO READ | Will new GST cuts help Tata Motors, Hero MotoCorp, Bajaj, Maruti Suzuki and other automakers lift declining domestic sales?

 

This move, in time for India’s festive season starting with Onam and Diwali, is expected to lift demand for passenger cars of the four leading automakers, Maruti Suzuki, Mahindra & Mahindra, Hyundai Motor India, and Tata Motors, which control 80 per cent of the market. These brands saw their shipments to dealers slide by at least 8.5 per cent in August.

The Indian stock markets would also be on the lookout for a prospective rate cut by the  US Federal Reserve later this month, to add on ot the latest GST rate cut back home.

The 30-pack BSE Sensex climbed around 338 points to as high as 81,048.67 while the NSE Nifty rallied 105 points to 24,845.70 in the first half of Monday.

Tata Steel and Tata Motors led the rally in the Sensex, with Mahindra & Mahindra, Adani Ports,  and UltraTech Cement adding to the mix.

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