Auto Stocks Rocket 12% as GST 2.0 Turbocharges Market Sentiment

GST 2.0 sends automotive sector into overdrive—traders pile in as regulatory clarity fuels bullish momentum.

THE CATALYST

Policy overhaul triggers instant sector-wide reevaluation. Investors reposition portfolios, betting on streamlined compliance and reduced operational friction. The 12% surge reflects pure anticipation—nobody's waiting for quarterly reports to validate the thesis.

MARKET MECHANICS

Liquidity floods auto ETFs while manufacturers see order books swell. Shorts get squeezed as institutional money chases momentum—classic FOMO pattern playing out in real time. Analysts scramble to upgrade targets, though some whisper about valuations looking… optimistic.

BEYOND THE HEADLINE

Supply chain plays rally in sympathy—battery makers, software providers, even logistics firms catch the bid. The reform’s ripple effect exposes how deeply tax structures influence sector rotations. Smart money’s already eyeing secondary beneficiaries before retail catches on.

Of course, Wall Street’s already spinning this as their own genius forecast—never mind that most couldn’t spell ‘GST’ last quarter. The surge proves yet again: in markets, perception often outpaces reality… until it doesn’t.

Also read

Hero MotoCorp to reduce prices by up to ₹15,743 to pass on GST rate cut benefits

Auto stocks have surged sharply. The Nifty Auto index has climbed 12 per cent as the GST reforms triggered investor Optimism that lower taxes will spur demand and improve profitability across the sector. 

Analysts turn bullish

Brokerages have turned positive on the sector. Bank of America issued buy calls on Maruti Suzuki and M&M, citing strong demand recovery prospects. Market experts believe the combination of tax cuts, rising incomes, and consumer confidence could sustain the rally, positioning the auto sector as a key market outperformer in the NEAR term.

Analysts at Emkay Global, Jefferies, Motilal Oswal, and ICICI Direct pointed to M&M’s strong SUV and tractor portfolio, which is well-positioned to capture incremental demand.

Axis Securities cited that Maruti Suzuki is well-positioned to regain domestic market share.

Also read

Volkswagen India to cut prices by up to ₹3.27 lakh to pass full benefit of GST rate reduction

Atul Auto has also witnessed a rally after GST on three-wheelers was slashed to 18 per cent. Analysts believe the cut will make three-wheelers more affordable, strengthening demand in Tier-II and Tier-III markets.

Heavyweight stocks such as Eicher, M&M and Ashok Leyland scaled to fresh highs.

The GST 2.0 framework is expected to have a largely positive impact on the automotive sector, especially for mass-market segments. Motilal Oswal cited that key players like Maruti Suzuki, M&M, Escorts, Bajaj, Ashok Leyland, HMCL, and component makers such as MSWIL, Bosch, and Endurance WOULD benefit.

On the other hand, premium two-wheelers (above 350cc) face a negative impact as rates rise to 40 per cent, affecting brands like Eicher. Electric vehicles remain unaffected with a neutral outlook, as their tax rate stays steady at 5 per cent.

Published on September 10, 2025

• Eicher Motors Ltd
• Tata Motors Ltd
• Mahindra & Mahindra Ltd
• Bajaj Auto Ltd
• Maruti Suzuki India Ltd