Maruti Suzuki hit a 52-week high of Rs 5,103.90 on the National Stock Exchange (NSE) in intra-day deals on Tuesday. From a 52-week low hit on February 29 earlier this year, the stock has rallied around 60% as compared to a 23% rise in the benchmark index, the Nifty 50. By comparison, the Nifty Auto index has also lagged behind, rising around 36% during this period.
The overall sentiment for the auto sector has been improving on the back of an above-normal monsoon, which could eventually trigger rural demand for entry level vehicles. That apart, the increased payout in the hands of government employees on account of the 7th Pay Commission recommendation implementation has also bolstered sentiment.
The passage of the goods and services tax (GST) bill by the Rajya Sabha, the implementation of which (assuming an 18% tax rate) will also benefit Maruti Suzuki by stimulating demand, analysts say. That apart, there will be gains from savings and distribution, reports suggest.
“Entry level cars would see reduction in on-road prices by around 8%, driving demand for this segment. Maruti Suzuki, which has over 80% of this segment, would be the biggest beneficiary, says a report from read more..
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