Auto shares in demand; Hero Moto, TVS, Bajaj, Bosch surge up to 6%

OEMs expect strong demand momentum to sustain in Q4FY26, and into H1FY27, post the GST 2.0 reforms, analysts said

Auto shares today

 

Shares of automobiles and auto ancillaries companies were seeing a healthy buying interest on the bourses on Wednesday, with the Nifty Auto index gaining 2 per cent on the National Stock Exchange (NSE) in the intraday trade. Investors bought auto shares today on expectation of a steady growth ahead. In comparison, the benchmark Nifty 50 was up 0.7 per cent at 25,600.95 at 12:00 PM.

 

The Nifty Auto index hit an intraday high of 28,574.25, gaining 2.2 per cent. The auto index had hit a record high of 29,179.10 on January 5, 2026.

 

Among individual stocks, shares of Hero MotoCorp (₹5,840) and Bosch (₹37,455) rallied 6 per cent each, while TVS Motor Company, Bajaj Auto, and Uno Minda shares were up 3 per cent each. Shares of Eicher Motors, Tata Motors Passenger Vehicle, Mahindra & Mahindra, Tube Investments of India, Exide Industries, and Bharat Forge also gained 2 per cent each.

 

 

Why are auto and auto ancillary shares rising on Wednesday?

 

The domestic automobile sector is expected to maintain steady growth momentum through FY2026, supported by policy measures to strengthen domestic manufacturing, improving affordability following Goods and Services Tax (GST) rationalisation, recovery in consumption, and sustained rural income levels after a normal monsoon, as per analysts.

 

Domestic automobile demand, rating agency Icra said, recorded strong growth across two-wheeler (2W) and passenger vehicle (PV) segments in January 2026, supported by sustained demand momentum, GST rate cuts, wedding season demand, and new model launches.

 

Dealer interactions, it said, indicate sustained enquiry traction, supported by better customer outreach, and faster digital responses, alongside a gradual preference for higher-value and mid-powered motorcycles.

 

Given this, Icra estimates two-wheeler domestic volumes to grow 6-9 per cent year-on-year (Y-o-Y) in FY26, aided by improved replacement demand after GST rate cuts, gradual recovery in urban consumption and healthy rural incomes. The rating agency expects the PV wholesale volumes to grow 5-7 per cent in FY26, supported by sustained demand momentum, GST cuts and continued new model launches.  CHECK Stock Market LIVE Updates 

Brokerages on auto, auto ancillaries sector

 

Meanwhile, analysts at Axis Securities expect Ebitda margins to remain largely stable in the near-term, supported by a richer product mix, even as raw material headwinds exert slight pressure.

 

The brokerage firm expects 2W sales volumes to sustain in mid-to-high single-digit growth in FY26, supported by new premium segment launches, an extended replacement cycle, and recovery in exports. A favourable monsoon, GST rate cut, income tax relief, and increased rural spending are likely to further drive demand for entry-level motorcycles.

 

"Overall PV sales growth, which has been largely led by the UV segment, is expected to remain in the mid single digits in FY26E (earlier low single digit expectations) due to the GST rate cut and new model launches, which may help arrest declining entry-level PV domestic sales," Axis Securities noted.

 

In the long run, for auto ancillaries sector, product premiumisation, strong order books, growing exports, GST rate cut, and the shift toward EVs are expected to drive higher content per vehicle, boosting profitability.

 

"The original equipment manufacturer (OEM) expects strong demand momentum post the GST 2.0 reforms to sustain in the fourth quarter (Q4FY26) and into H1FY27 as well. However, growth could moderate in H2FY27, given high base," according to analysts at Elara Capital.

 

Commercial vehicles (CV) would report strong double-digit growth in Q4 as OEM see replacement demand kicking in post the GST 2.0 reforms, which improved fleet operating matrices. 

 

"While OEM refrained from sharing the FY27 outlook, most continue to see high single-digit growth for the passenger vehicles and two-wheeler industries. We expect FY27E industry growth at 8 per cent for PV, 10 per cent for 2W, 6 per cent for medium & heavy commercial vehicle (MHCV), 9 per cent for light commercial vehicle (LCV), and 5 per cent for tractors. Inventory in the system remains lean, which gives OEM comfort to push inventory in Q4, sustaining the growth trend," analysts at the brokerage said in a automobiles sector report. 

 

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