Shares of auto companies rallied up to 10 per cent on the Bombay Stock Exchange (BSE) on Wednesday on hopes of GST rate cut after Finance Minister Nirmala Sitharaman said the government was looking at steps to revive the ailing sector.
In a press briefing on Tuesday, Sitharaman said that the government is aware of the need to respond to the troubles in the auto sector. He assured that a decision on GST rate cut for vehicles would be taken soon.
Riding high on hopes of GST rate cut, BSE auto index gained 3.6 per cent, or 565.52 points, to close at 16,665, led by index heavyweights such as Tata Motors, Eicher Motors, Maruti Suzuki India, TVS Motor Company and Motherson Sumi Systems. On the contrary, the BSE Sensex has gained 0.34 per cent to settle at 37,270.
Shares of Tata Motors, the country's largest automobile manufacturer, gained 10.21 per cent to settle at Rs 134.35 on Thursday after the auto major reported a recovery in August retail sales for China market. The large cap stock has fallen 24 per cent since the beginning of this year and lost 50.9 per cent during last one year. The stock hit its 52-week high of Rs 282 on September 10, 2018 and 52-week low of Rs 106 on September 4, 2019.
The stock also saw a spurt in volume trade as 58.01 lakh shares changed hands over the counter as compared to a two-week average volume of 41.44 lakh shares on the BSE.
Maruti Suzuki India shares rose 4.18 per cent to settle at Rs 6,598.35 against Tuesday's closing level of Rs 6,333.50. Eicher Motors advanced 4.98 per cent to Rs 17012.8 and Motherson Sumi Systems gained 4.08 per cent close at Rs 103.30 on the BSE.
Meanwhile, shares of TVS Motor Company climbed 3.64 per cent to end at Rs 402.80 apiece on the BSE.
In the last six months, the BSE auto sector index skidded over 30 per cent and the NSE's Nifty auto index too dropped nearly 35 per cent in the same period, dented by weak consumer sentiment and slowdown in the sector.
While the domestic slowdown was the key drag on their financials, auto companies also bore the brunt of the slowdown in the global markets. The automakers are laying off staff and temporarily halting production to align their inventory of goods and to keep costs in check.
Last month, FM Sitharaman announced a slew of measures including hiking depreciation benefit on all vehicles from 15 to 30 per cent, deferring a proposed multi-fold increase in registration fee and reversing a five-year old ban on government purchases to provide a boost to the domestic automobile industry, which has been battling an unprecedented and protracted slowdown in the domestic market.
Edited by Chitranjan Kumar