| The mood was upbeat after Finance Minister P Chidambaram's promise to look at the tax structure for small cars and the government's decision to sell its 8 per cent stake in Maruti. |
| Maruti Suzuki Motors hit a 52-week high of Rs 522.80, before closing at Rs 510.95, up 5.35 per cent from the previous close. Trading volumes shot up by nearly eight times. About 13.04 lakh shares changed hands on the BSE alone. |
| The shares of Tata Motors went up by 4.80 per cent to close at Rs 492.25. But the stocks of Ashok Leyland and Swaraj Mazda remained subdued. The incidental gainers in the auto segment were two-wheeler makers TVS Motors (5.03 per cent), Bajaj Auto (3.34 per cent) and Hero Honda (2.81 per cent). |
| Analysts said Maruti would be the biggest beneficiary if differential taxes were levied based on size or cost. Suzuki is a leading player in the small-car segment worldwide. The next big beneficiary will be Tata Motors, which is in the process of manufacturing a Rs 1 lakh car. |
| Shahina Mukadam of IDBI Capital Markets said, "If the taxes are eased, both Maruti and Tata Motors would benefit. Both companies have popular models in the low-cost category apart from a high level of indigenisation to qualify for lower duties." |
| Hiten Sampat of Parag Parikh Financial Advisory Services concurred with this view. Still, he expressed concerns, saying, "Though lower excise duties will bring down the cost of small cars by 20-30 per cent, benefits to companies may be marginal due to intense competition. However, the lower duties will change the dynamics and make it a volumes game which can eventually benefit companies." |
| Vivek Pande of Anand Rathi Securities had a different view. He said, "The move may not help entry level models like Maruti-800. Rising aspirations and higher income levels will mean more demand for cars in the Rs 3 lakh segment." |
| He pointed to the poor response to the recent slashing of price of the Maruti 800 to drive home his point. |
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