Auto stocks today ended as much as 4 per cent higher after Finance Minister P Chidambaram decided to reduce excise duty on automobiles in the interim Budget 2014-15.
Shares of Escorts rallied 3.82 per cent, while TVS Motor Company climbed 3.31 per cent on the BSE.
Mahindra & Mahindra closed the day 2.83 per cent higher, while Hero MotoCorp was up 1.99 per cent, Maruti gained 1.38 per cent and Eicher Motors rose by 1.11 per cent.
The BSE auto index rose by 0.76 per cent to settle at 12,058.97.
"In a major relief to the auto industry, the FM announced reduction in excise duty across all segments. We expect the duty reduction to stimulate demand. This is on the assumption that there will be no roll-back in the excise duty in the final budget which is likely to be presented in June-July'14, post the Lok Sabha elections," said Surjit Arora, Research Analyst Institutional Equities, Prabhudas Lilladher.
Earlier in the day, Chidambaram announced cut in excise duty across various segments of automobiles in order to give a boost to the industry that has been on a prolonged slump.
Excise duty on small cars, scooters, motorcycles and commercial vehicles will come down to 8 per cent from 12 per cent earlier.
SUVs will attract excise duty of 24 per cent as against 30 per cent earlier.
Meanwhile, in the broader market, the benchmark Sensex ended 97.24 points higher at 20,464.06.
