Most auto stocks traded with healthy gains in morning trade on Thursday, 25 June, driving their sectoral index Nifty Auto to the higher orbit. The index jumped over 2% during the session, looking set to snap its two-day losing run. On a weekly basis, the index is up for the third consecutive week, and on a monthly basis, it is up for the third consecutive month.
On Thursday morning, major auto stocks, such as Maruti, TVS Motor, Ashok Leyland, Mahindra and Mahindra, Hero MotoCorp, and Eicher Motors, rose more than 2% each.
Other stocks in the Nifty Auto pack, including Samvardhana Motherson International, Tata Motors Passenger Vehicles, Bajaj Auto, and Bharat Forge, also rose 1-3%.
Why are auto stocks rising?
The auto stocks are witnessing buying interest as concerns over commodity prices, fuel price volatility, and geopolitical uncertainties ease.
Crude oil benchmark Brent Crude declined to near $70 per barrel, calming concerns over inflation and dimming the prospects of rate hikes by the Reserve Bank of India.
Moreover, the industry’s structural growth drivers remain intact.
“We believe structural growth drivers remain firmly intact, including premiumisation, electrification, replacement demand and continued infrastructure spending,” said Choice Equity Broking.
Choice Broking highlighted that the automobile sector delivered a healthy performance in Q4FY26, supported by a resilient retail demand, premiumisation trends, improving rural sentiment and continued traction in EV adoption.
“In Q4FY26, industry retail sales grew 23.3% YoY, led by a strong growth in passenger vehicles (up 20.3% YoY), two-wheelers (up 25.0% YoY) and commercial vehicles (up 19.5% YoY), reflecting a broad-based growth across segments,” said Choice Broking.
Experts expect passenger vehicle volumes to grow by about 4-6% in FY27.
According to SIAM, the industry is optimistic and expects growth to continue in all the vehicle categories in FY27, continuing strong domestic momentum from the latter half of FY26.
Brokerage firm Axis Securities highlighted that for FY27, “auto OEMs remain optimistic about long-term structural growth drivers, including India’s vast road network, policy measures aimed at reducing supply chain costs, the vehicle scrappage policy, reduced interest rate costs, and continued infrastructure capex outlined in the Union Budget.”
Among OEMs under its coverage, Axis Securities’ top conviction ideas in two-wheelers are Eicher Motor and Bajaj Auto, while in PVs, it is Maruti Suzuki. In the PV/tractor segment, Axis favours Mahindra & Mahindra, given its strong SUV product portfolio and leadership position in the domestic tractor industry.
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