Auto stocks in demand

Eight automobile stocks rose by 0.04% to 3.58% at 9:54 IST on BSE after the government extended excise duty cut on automobiles till December 2014.

Eicher Motors (up 3.58%), TVS Motor Company (up 1.61%), Ashok Leyland (up 1.18%), Mahindra & Mahindra (up 0.74%), Bajaj Auto (up 0.70%), Escorts (up 0.18%), Tata Motors (up 0.29%) and Hero MotoCorp (up 0.04%), edged higher.

However, Maruti Suzuki India was down 1.39%.

The S&P BSE Auto index was up 0.34% at 15,312.80. It outperfrmed the Sensex, which was down 0.56% at 25,173.15.

The S&P BSE Auto index had outperformed the market over the past one month till 25 June 2014, rising 4.66% compared with 2.51% rise in the Sensex. The index had also outperformed the market in past one quarter, rising 18.11% as against Sensex's 14.77% rise.

In order to provide a fillip to the automobile sector, and given its commitment to revive the economic growth, the Government of India on Wednesday, 25 June 2014, decided to extend duty concessions beyond 30 June 2014 for a period of six months upto 31 December 2014.

Finance Minister Arun Jaitley said that government expects the industry to show positive results in the coming months. Jaitley said that the government also expect that the benefit of these duty concessions will be passed on to the consumers at large.

In February 2014, the previous UPA government had reduced the excuse duty on small cars, motorcycles, scooters, three wheelers and commercial vehicles from 12% to 8%; mid-segment cars from 24% to 20%; large cars from 27% to 24%; and SUVs from 30% to 24%.

This was done in the wake of an unprecedented negative growth in the automobile industry.

However, despite duty cuts, auto-sales have not picked up during March-April, 2014, although some positive signs could be seen from the sales figures of May 2014, the Finance Ministry said in a statement.

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