Key Takeaways:
- Indian auto sector rally lifts BSE Auto index, which outperformed the Sensex with an 18% calendar-year gain.
- Maruti Suzuki hit a fresh high as dealers and brokerages point to sustained demand and export momentum.
- Brokerages expect medium and heavy commercial vehicle volumes and tractor demand to support further growth.
Shares of India’s automobile companies climbed on Tuesday as the BSE Auto index led sectoral gains amid expectations of healthy December sales. At around 11:18am, the auto index was up 0.68 per cent, outperforming the BSE Sensex which fell 0.09 per cent. The auto index recorded an intra-day high of 61,989.90 and has rallied about 18 per cent so far in calendar 2025, compared with an 8 per cent rise in the Sensex.
Indian auto sector rally drives stocks higher
Maruti Suzuki India climbed to a fresh peak, with its share price touching ₹16,825 in intra-day trade, up roughly 1.6 per cent and surpassing its previous high of ₹16,798.80 from 23 December 2025. Other original equipment manufacturers also advanced, with Ashok Leyland up about 2 per cent to ₹178 and trading close to its record level. Hero MotoCorp, Bajaj Auto, Mahindra & Mahindra, TVS Motor, Tata Motors and Tata Motors Passenger Vehicles were all higher, generally gaining between 1 and 2 per cent.
Brokerage commentary underpinned the positive tone. Analysts at Kotak Institutional Equities raised their near-term outlook for the medium and heavy commercial vehicle (M&HCV) truck segment, forecasting volumes to grow 8 per cent year-on-year in FY2026E, up from an earlier 5 per cent estimate. Kotak expects sustained momentum in the M&HCV segment through the second half of FY2026 as e-commerce activity, infrastructure spending and seasonal demand for tipper vehicles support fleet utilisation.
Crisil Ratings highlighted that Maruti’s operating margin is expected to remain around 12–13 per cent in the near to medium term, helped by improving operating leverage as small car offtake rises following recent GST rationalisation. Crisil also noted rising export share and relatively stable raw-material and forex conditions. Maruti is operating close to 90 per cent capacity at present, and the commissioning of new capacity under implementation should reinforce its market leadership.
Mahindra & Mahindra pointed to a favourable backdrop for tractors and farm implements, driven by record kharif production and larger rabi sowing acreage. The company said government measures, including GST-rate reductions and higher minimum support prices, have improved farmer cash flows and supported tractor demand. M&M expects its auto and farm segments to sustain healthy volume growth in FY2026 aided by fresh model launches.
Analysts at Motilal Oswal see a continuing recovery in demand for entry-level two-wheelers and passenger vehicles, which has already helped sustain momentum after the festive season. They expect discounts to ease gradually and name Maruti Suzuki as their top pick among auto OEMs on the basis of new launches and export momentum. The brokerage also retains a favourable view on M&M and TVS Motor.
Market participants flagged that the sector’s strength reflects not only consumer demand but also structural drivers such as rising e-commerce, infrastructure investment and supply-side improvements. However, investors remain attentive to capacity additions, commodity prices and global macro conditions which could influence margins and volume growth.
Disclosure: Views quoted are those of the respective brokerages and do not constitute endorsement by this publication. Readers are advised to consider their own research or seek independent advice before making investment decisions.
