Auto Stocks Zoom, Hero MotoCorp Surges 9%, GST Reform Hopes Brighten Outlook

Mumbai: It was a power-packed start to the week for auto stocks. Hero MotoCorp led the rally, jumping nearly 9 per cent in Monday’s morning trade. Excitement in the market grew after Prime Minister Narendra Modi hinted at big GST reforms that could be rolled out by Diwali.

Other major players also raced ahead — Maruti Suzuki climbed 8 per cent, Ashok Leyland 7.95 per cent, Hyundai Motor 7.68 per cent, and TVS Motor 7.12 per cent. Bajaj Auto gained 5.18 per cent, while Mahindra & Mahindra, Eicher Motors and Tata Motors also closed higher. The overall BSE Auto index rose 4.48 per cent to 56,371.23.

Why GST reforms matter

At present, automobiles attract the highest GST rate of 28 per cent, plus a compensation cess that goes up to 22 per cent, depending on the type of vehicle. This makes cars and two-wheelers expensive.

Under the new proposal, the government plans to simplify GST into just two main slabs — 5 per cent and 18 per cent — along with a 40 per cent slab for luxury items. If automobiles move to a lower GST bracket, prices of cars and bikes could come down, boosting demand in the festive season.

PM’s Diwali assurance

In his Independence Day speech, PM Modi spoke about "next generation GST reforms." On Sunday, he confirmed that a draft of these reforms has already been shared with states for their feedback. The government hopes to implement the changes before Diwali.

What experts say

Market analysts believe the move could be a game changer for the auto sector. “There are strong tailwinds for the market. Autos and cement, which are taxed at 28 per cent now, will be the biggest beneficiaries,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

For consumers, this could mean lower prices on popular vehicles and better festive offers. For automakers, it could mean a surge in sales and higher investor confidence.