Auto stocks rise on hopes of higher sales

Nine shares from auto sector rose 0.2% to 3.87% at 15:13 IST on BSE on hopes of higher sales after the Cabinet today, 29 June 2016 reportedly cleared recommendations of the 7th pay commission.

Hero MotoCorp (up 3.87%), Tata Motors (up 1.51%), Bajaj Auto (up 0.64%), SML Isuzu (up 1.14%), Escorts (up 0.57%), Ashok Leyland (up 0.2%), Maruti Suzuki India (up 1.28%), Mahindra & Mahindra (M&M) (up 0.54%) and TVS Motor Company (up 0.79%) edged higher. Eicher Motors slipped 0.29%.

The BSE Auto index was up 1.44% at 19,460.23. It outperformed the Sensex, which was up 0.76% at 26,727.22

The BSE Auto index had outperformed the market over the past 30 days till 28 June 2016, rising 1.39% compared with Sensex's 0.75% fall. The index had also outperformed the market in past one quarter, gaining 6.57% as against Sensex's 4.68% rise.

As per reports, the key recommendation of the 7th pay commission is a 23.55% increase in salaries, allowances and pension of central government employees and pensioners. This is built around the recommendation for a 14.27% hike in basic pay. This move will impact the remuneration of nearly 50 lakh central government employees and 58 lakh pensioners. The changes are likely to be implemented from 1 January 2016, reports indicated. The implementation of the pay commission will have a positive impact on auto sector as higher spending ability will boost consumption demand.

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