Tata Motors Ltd shares surged as much as 10% in intra-day trade on Tuesday, amid a broader rally in auto stocks. The sentiment for the stock was also boosted by positive development on US China trade talks as signs emerged that the two sides could come back to the bargaining table.
At 3:01 pm, the Tata Motors stock was trading up 9% at Rs 120.55 after hitting an intra-day high of Rs 121.40. The Nifty Auto Index was also trading up over 2% compared with a 0.6% rise in the benchmark Nifty 50 index.
Apart from Tata Motors, the other major gainers from the auto space included Ashok Leyland (up 6%), Motherson Sumi Systems (up 4%), Apollo Tyres (up 3.6%) and Eicher Motors (up 3.2%), among others.
Maruti Suzuki India Ltd shares inched just under 1%. Sentiment was muted at this counter as chairman RC Bhargava said the company had not renewed the contracts of 3,000 temporary employees, as the auto maker battled rising inventory amid a slowdown in demand.
Auto stocks came back in favour after finance minister Nirmala Sitharaman on Friday announced a slew of measures to help the ailing industry, including deferring one-time registration fee, lifting a ban on the purchase of petrol/diesel vehicles by its departments and allowing higher depreciation.
“...because inventories are stocking up and piling up in car manufacturing companies. Today you get a 15% depreciation on them ... all vehicles to increase it to 30% acquired from now till March 2020,” said Sitharaman.
Additionally, in a bid to help clear rising inventory of BS-IV emission compliant vehicles, the Centre announced that such vehicles purchased till 31 March 2020 will be allowed to ply till the validity of their registration.
However, the industry’s sentiment was not extremely optimistic with the finance minister's announcements for the auto sector. The sector still awaits clarity on the vehicle scrappage policy and some stimulus for two-wheelers.
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