The BSE auto index rose 5.6% on Tuesday, a day after the government announced no change in central excise duty in the Union budget, contrary to industry expectations. A hike in duty that would have affected the bottomlines of auto firms.
Auto stocks rallied for the second day also due to positive sales announced by OEMs (Original Equipment Manufacturers).
“The rollback of excise duty did not happen and sales of Tata Motors, Tata Motors and Maruti Suzuki have been healthy in February. For M&M the diesel vehicles were not taxed as expected,” Surjit Arora, auto analyst at Prabhudas Lilladher.
Analysts said that such a rally is not sustainable due to high interest rates and commodity prices.