With the Commerce and Industry Minister Nirmala Seetharaman rekindling hopes that the Government would come to the rescue of the auto sector, the CNX Auto Index was on fire, gaining over 60 points in the morning trade.
Interestingly, it was not only the shares of automobile manufacturing companies that made gains, auto ancillaries also joined the party.
The Minister had, in an interview to Business Line, said that “we are seized by a sense of urgency (as the excise duty reduction lapses this month)… We are working on it.”
The previous government, in an effort to provide some relief to the automobile industry that was battling declining sales due to tough economic conditions, had slashed the excise duty on small cars, scooters, motorcycles and commercial vehicles to 8 per cent from 12 per cent in the interim Budget in February this year. SUVs, large cars and mid-size cars also were provided some relief as the Government cut the duty for them as well. The auto sector has been pressing the new government for continuation of the sops to keep the industry humming.
Nirmala Seetharaman's comment that the Government was looking into the question of continuation of the excise duty cuts probably acted as a tonic to the sector which was reflected in the performance of the CNX Auto index. The gains were spread across the sector-from two wheelers to car manufacturers and did not leave out the auto ancillary units as well from the positive spin.
M&M has shot up by Rs 14.95 to Rs 1,176.15, Maruti gained Rs 25.85 to Rs 2,406.15, Eicher Motors galloped by Rs 103.45 to Rs 7,242.75 and Tata Motors was up modestly by Rs 1.80 to Rs 437.40. The two wheeler manufacturers Hero MotoCorp was up by Rs 23.75 to Rs 2607.20 and Bajaj Auto jumped by Rs 34.10 to Rs 2,225.20.
Among the auto ancillaries, Amtek Auto gained Rs 5.25 to Rs 248.90, MRF zoomed by Rs 301.05 to Rs 23,911.95 and Amararaja Batteries was up by Rs 6.25 to Rs 485.25. Only Motherson Sumi and Bharat Forge were down marginally among the 15 CNX Auto index stocks with 13 others in the auto index trading in positive territory, with the index up by about 62 points.