Auto shares rally; M&M, Maruti Suzuki up 5%

M&M, Maruti Suzuki, Tata Motors, Hero MotoCorp, Eicher Motors and TVS Motor were up 2% to 5%

Shares of automobile companies are on a roll, trading higher by up to 5% on the National Stock Exchange (NSE) after the Finance Minister Arun Jaitley announced a slew of incentives to boost the rural economy.

Mahindra & Mahindra (M&M) and Maruti Suzuki India rallied 5% each at Rs 1,298  and Rs 6,170, respectively. Tata Motors, Hero MotoCorp, Eicher Motors and TVS Motor Company were up 2% and 4% on the NSE.

At 03:13 pm; Nifty Auto index was up 3.6% as compared to 1.9% rise in the Nifty 50.

The Finance minister Arun Jaitley proposed increased in rural sector allocation by 23% and farm credit target upped - should drive an increase in consumption from rural India and benefit rural focused companies.

“The focus on agriculture and rural sector should help sectors like agrochemicals and fertilizers while lower income taxes should help in reviving the consumption demand. Overall we believe that this is a good budget,” said Dinesh Thakkar, chairman & managing director, Angel Broking.

Besides, the income tax reductions for common people is further going to increase the buying potential or take loans for various purposes.

Meanwhile, Maruti Suzuki India hit a record high of Rs 6,197 on the NSE after the company 27% jump in total sales at 144,396 units in January 2017 as against 113,606 units in the year-ago period.