Nine auto shares rose 0.14% to 4.67% at 12:15 IST on BSE after the Reserve Bank of India reduced the policy repo rate by 25 basis points to 6.25%.
The monetary policy was announced by the RBI today, 7 February 2019.The S&P BSE Auto index was up 1.49% at 19,549.86. It outperformed the Sensex, which was up 0.21% at 37,052.02
Ashok Leyland (up 4.67%), Bajaj Auto (up 2.8%), Mahindra & Mahindra (M&M) (up 1.76%), Eicher Motors (up 1.09%), Hero MotoCorp (up 1.8%), TVS Motor Company (up 3.49%), Tata Motors (up 2.05%), Escorts (up 0.14%) and Maruti Suzuki India (up 0.93%) 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, the Monetary Policy Committee (MPC) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5% to 6.25% with immediate effect.
Consequently, the reverse repo rate under the LAF stands adjusted to 6%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5%.
The MPC also decided to change the monetary policy stance from calibrated tightening to neutral.
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