India’s Auto Stocks Surge as GST Cuts Boost Demand Outlook
India’s auto stocks rallied on Thursday, with the Nifty Auto index jumping as much as 3.7% to its highest level in nearly 11 months after the government slashed consumption taxes on vehicles. Auto shares were last up 1.9%, leading gains on the benchmark Nifty 50 index, which traded 0.6% higher.
Mahindra & Mahindra and Eicher Motors spearheaded the rally, hitting record highs. Mahindra surged 6% to become the top gainer on the Nifty, while Eicher benefited from strong investor sentiment, with analysts pointing to the significant share of tractors in its portfolio.
The Goods and Services Tax (GST) Council on Wednesday reduced levies on a wide range of items, including small cars, motorcycles, buses, trucks, and ambulances, cutting rates to 18% from 28%. Large cars and SUVs will now face an effective 40% tax after the removal of an additional levy. Analysts said the move is expected to stimulate demand across the sector, calling it a “surprise win” for Mahindra and a key boost for Eicher.
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