The Indian auto rally broadened on Monday, with strong buying seen across auto component makers, commercial vehicle manufacturers, and two-wheeler stocks. Investor sentiment remained upbeat following GST-led price cuts, improving infrastructure outlook, and upward revisions in target prices by leading brokerages.
Shares of Bharat Forge surged nearly 6%, while Ashok Leyland climbed over 4%, as the market priced in expectations of higher demand for commercial vehicles and components amid increased freight movement and a pickup in infrastructure projects. Analysts cited the GST rate reduction and festive season tailwinds as catalysts for volume recovery in the CV and auto parts segment.
Two-wheeler giants Bajaj Auto, Hero MotoCorp, and TVS Motor recorded gains between 3% and 4%, as Bank of America (BofA) raised their target prices, citing improving retail sentiment and expected volume traction in the coming months. However, BofA retained a Neutral stance, pointing to a still-fragile rural recovery and rising competition in the segment.
Maruti Suzuki rose 1.6%, with investors optimistic about possible price reductions in its entry-level models. While the company has not made a formal announcement, Chairman R.C. Bhargava suggested that discounts of up to ₹45,000 on the Alto and ₹70,000 on the WagonR are being considered in response to recent GST revisions. BofA maintained a Buy rating and raised its target price to ₹17,000, citing potential demand acceleration in the mass-market segment.
Eicher Motors, parent of Royal Enfield and a player in the commercial and agricultural vehicle space, gained over 2%. BofA revised its target price upward, citing improved margin visibility, a favorable product mix, and potential benefits from the GST cut on tractors, a segment that contributes significantly to the company’s revenue.
The broad-based rally reflects growing investor confidence across the entire auto sector, from passenger cars and two-wheelers to commercial vehicles and component suppliers. Analysts believe the recent GST cuts will enhance vehicle affordability and stimulate demand just ahead of the festive season.
“Investors are starting to price in the widespread impact of the GST reduction,” noted an analyst at a domestic brokerage. “Whether it’s scooters, trucks, or spare parts — the benefits are expected to ripple across the entire automotive value chain.”
The rally signals renewed optimism among investors about the sector’s near-term prospects, fueled by government reforms, festive buying, and improving macroeconomic factors. With GST cuts becoming effective in late September, coinciding with key festival periods, analysts expect the auto industry to see robust demand growth in the coming months.
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