The stock jumped 8.41 per cent to Rs 322 on BSE.
On the NSE, shares of the company surged 8.17 per cent to Rs 322.10.
The stock was the top gainer on both Sensex and Nifty.
Tata Motors' sales of passenger cars in September were higher by 5 per cent at 10,226 units, as compared to 9,766 units in same period of last year.
The stock also rallied on reports that Tata Motors September US JLR sales have risen sharply.
As per media reports, the company is in talks with PSA Peugeot Citroen to form a partnership that might result in Tata producing and distributing the French giant's cars for the Indian market.
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