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Maruti Suzuki shares jumps 7%: Why are auto stocks rallying today?

Maruti Suzuki shares jumps 7%: Why are auto stocks rallying today?

India Today2 days ago
Auto sector shares jumped sharply on Monday as Sensex and Nifty started the week with a bang after a brief pause due to Independence Day. Both the indices rallied in early trade on Monday, adding over 1% to their previous close.Top auto sector stocks rallied sending the market up. The S&P BSE Sensex was up 1,062.91 points to 81,659.75, while the NSE Nifty50 jumped 356 points to 24,987.30 as of 9:32 am.Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said, "There are strong tailwinds for the market with potential to take it higher. Declarations by the prime minister on the next major reforms in GST by Diwali, is a big positive. The expectation is that most of the goods and services will be in the 5% and 18% tax slabs."He added that sectors like autos and cement which are presently in the 28% tax slabs are expected to benefit.At the opening bell, Maruti Suzuki surged the most with a sharp gain of 7.14%, followed by Bajaj Finance up 4.79%, Mahindra & Mahindra adding 3.81%, and Bajaj Finserv climbing 3.48%.Losses were seen in a few heavyweights. Larsen & Toubro slipped 0.57%, ITC fell 0.43%, HCL Technologies declined 0.31%, Sun Pharmaceutical Industries dropped 0.20%, and Infosys edged lower by 0.11%. Early trade clearly showed strong buying in auto and financial stocks, while IT and pharma names dragged at the bottom.WHY AUTO STOCKS ARE RISING?TVS Motors, Hero, Eicher, M&M and Maruti are likely to respond positively to the news. Insurance companies are also expected to benefit from the GST revision. S&P 500 upgrading India's sovereign credit rating is another major positive. But the market ignored this announcement since the negative news flows are also strong. India-US trade talks are unlikely to happen before August 27th deadline. The ' Trump Sword' of 50% tariff dangling on India will restrain the market enthusiasm which can be triggered by the positive news mentioned earlier. The outcome of today's meeting at the White House for finding a solution to the Russia-Ukraine conflict will be keenly watched by the market.- Ends
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