, Auto stocks rally on hopes of GST rate cut, scrappage policy; Tata Motors zooms 10%

Auto stocks rally on hopes of GST rate cut, scrappage policy; Tata Motors zooms 10%


Last Updated : Sep 11, 2019 03:47 PM IST | Source:Moneycontrol.com

Tata Motors spiked over 10 percent followed by Eicher Motors, Maruti Suzuki and Motherson Sumi Systems.

, Auto stocks rally on hopes of GST rate cut, scrappage policy; Tata Motors zooms 10%

The Indian auto industry has been going through a slump, its worst in many years. Vehicle sales are down and inventories are bloated, forcing a cut in production, putting thousands of jobs on the line.

However, hopes of GST rate cut, especially after Finance Minister Nirmala Sitharaman hinted at more steps to help the auto companies, has provided some support, helping the auto index close 3.6 percent higher on September 11.

The finance ministry is considering suggestions from automobile and auto component manufacturers, said Sitharaman. “We are working on a few things. Let’s see what comes out. We are conscious that we need to respond.”

The stocks which reacted the most includedTata MotorsandTata Motors DVRwhich spiked over 10 percent each followed byEicher Motors (up 5 percent), andMotherson Sumi Systems, that added 4 percent. The other gainers includedMaruti Suzuki,Bajaj Auto,Hero MotoCorpandMahindra & Mahindra.

, Auto stocks rally on hopes of GST rate cut, scrappage policy; Tata Motors zooms 10%

“I am positive on some auto stocks with a six-to-twelve month view because these are brands which are going through a one-year cyclical slowdown after being the biggest wealth creators for eight-ten years,” said Sanjiv Bhasin, EVP-Markets & Corporate Affairs at IIFL.

“In the case of auto companies, both structural, as well as cyclical issues, have conversed to trigger a slowdown. However, it is most unlikely that the auto sales will fall more in the near future,” said G Chokkalingam, Founder of Equinomics Research & Advisory.

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First Published on Sep 11, 2019 03:46 pm

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