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Tata Motors, Bajaj Auto, Ola electric rally, Auto stocks rally: Indian auto stocks extended their winning streak on Tuesday, rising for the second consecutive session on optimism around a potential GST cut and fresh supply chain assurances from China. The Nifty Auto index gained another 1 per cent, following Monday’s 4.9 per cent jump — its biggest single-day gain in months.

At around 10:55 AM, top gainers in the auto pack included Ola Electric, Bajaj Auto, Hero MotoCorp, Maruti Suzuki, Hyundai Motor, Eicher Motors, and TVS Motor Company, with individual stocks rising as much as 6 per cent in early trade. The Nifty Auto index is now up over 11 per cent year-to-date, outpacing broader market indices.

The surge in auto stocks was initially driven by reports that the government may cut Goods and Services Tax (GST) rates on vehicles to boost consumer demand — a move that could be especially beneficial for two-wheeler and electric vehicle makers.

Sentiment got another boost after China’s foreign minister, who is currently in India for high-level talks, reportedly assured Indian officials that Beijing would work to resolve critical supply concerns — especially around rare earth magnets and tunnel boring machines.

Rare earth magnets are a key input in electric motors, sensors, and other auto components, and China controls nearly 90 per cent of global production. Supply bottlenecks from China have disrupted Indian EV production over the past few months. Bajaj Auto, for example, cut production of its electric two-wheelers by up to 50 per cent in July, and warned of limited output in August and September.

In its Q1FY26 earnings call, Hero MotoCorp acknowledged that rare earth-related shortages remain an industry-wide issue. However, the company said it had secured adequate supply to support production of both internal combustion engine and electric vehicles through the second quarter. Tata Motors, India’s largest EV player, has also flagged rare earths as a vulnerability and is exploring alternative sourcing options.

If China follows through on its assurances, and the government pushes ahead with a GST cut, automakers could see a favourable tailwind on both supply and demand fronts — a rare combination in a sector grappling with cost pressures and evolving technology demands.

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Senior Sub-editor at Zee Business English

shweta.shukla@India.com

Shweta Birendra Shukla is a journalist covering the stock market and corporate affairs, with prior stints at Business ...LATEST NEWSBy accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.