Ten auto shares rose 0.61% to 3.56% at 15:16 IST on BSE after the Reserve Bank of India hiked the policy repo rate by 25 basis points while maintaining its neutral stance.
The monetary policy was announced by the RBI at 14:30 IST today, 6 June 2018.The S&P BSE Auto index was up 380.12 points or 1.55% at 24,837.60. It outperformed the Sensex, which was up 273.06 points or 0.78% at 35,176.27.
Tata Motors (up 3.56%), Ashok Leyland (up 1.88%), Maruti Suzuki India (up 0.52%), Bajaj Auto (up 1.37%), SML Isuzu (up 2.57%), Escorts (up 0.68%), Mahindra & Mahindra (M&M) (up 1.45%), Eicher Motors (up 2.5%), Hero MotoCorp (up 0.82%) and TVS Motor Company (up 0.61%) gained.
Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.
On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, 6 June 2018 the Monetary Policy Committee (MPC) decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25%. Consequently, the reverse repo rate under the LAF stands adjusted to 6%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%.
The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2 per cent, while supporting growth.
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