Auto shares on fast-track; TVS Motor, Hero MotoCorp rally up to 5%

At 10:42 am; Nifty Auto index, the top gainer among sectoral indices, was up 1.6 per cent, as compared to 0.39 per cent decline in the Nifty50 index.

Shares of automobiles companies were trading firm with the Nifty Auto index gaining nearly 2 per cent in an otherwise weak market on expectations that increased economic activity and growth in employment would fuel demand for automobiles including two-wheelers.

TVS Motor Company surged 5 per cent to Rs 656.55 on the National Stock Exchange (NSE) in Thursday’s intra-day trade. While, Hero MotoCorp gained 4 per cent to Rs 2,802, followed by Maruti Suzuki India (3 per cent) and Bajaj Auto, Ashok Leyland and Tata Motors are up 2 per cent, each.

At 10:42 am; the Nifty Auto index, the top gainer among sectoral indices, was up 1.6 per cent, as compared to 0.39 per cent decline in the Nifty50 index.

Most of the analysts retain a positive view on the auto sector, underpinned by expectations of a cyclical upturn in the next three years.

Robust allocation of Rs 7.5 trillion (up 35 per cent YoY) towards capital expenditure and measures to spur private capex bodes well for domestic commercial vehicle industry with robust growth expectations especially in the M&HCV segment.

The government has proposed to come out with Battery Swapping Policy which also includes the concept of energy/ battery as a service. In addition to it, the government has substantially increased allocation to Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) scheme at Rs 2,908 crore for FY23E vs. Rs 800 crore for FY22E.

The government's continued focus on infrastructure will not only improve the quality of lives and generate jobs but will also help Indian industry become globally competitive.

The enhanced spending plan on capital expenditure and increased allocation to the Rural Infrastructure Development Fund and a major push to infrastructure developments under Gati-Shakti is likely to aid a credible economic recovery and employment generation, Dr. Pawan Munjal, Chairman & CEO, Hero MotoCorp said on commenting on the Union Budget 2022.

“One of the landmark announcements of this Budget is the battery swapping policy, which has the potential to be a game-changer in catalysing the migration to EVs. While the scale of its impact will be clear upon formation of the policy, the industry is committed to sharing its insights and expertise with the Government to make this a reality,” Dr Pawan Mujal said.

On outlook, Tata Motors while announcing December quarter results on January 31, 2022 said the demand remains strong despite near term concerns from Omicron spread. The semiconductor supply situation is improving gradually whilst inflation worries persist. Over the last two years, the resilience of the business has improved, and it is now intrinsically stronger, the company said.