Most auto stocks were trading with decent gains in morning trade on August 27, keeping their sectoral index in the green.
The BSE auto index traded 1.61 percent higher at 16,048.24 around 1010 hours (IST) and looked on course to extend its gaining spree into the third consecutive session.
Among the total 16 components in the index, only one - Cummins India - was in the red at that time.
Ashok Leyland, Tata Motors, Mahindra & Mahindra, Hero MotoCorp and Maruti Suzuki gained significantly.
Auto stocks have been witnessing traction after the Finance Minister Nirmala Sitharaman announced measures to boost the sector that has been grappling with piling up of inventories due to a slump in demand.
The Finance Minister gave major to the auto sector as she deferred the one-time registration fees till June 2020, which, analysts say, may have a significant impact on short-term demand.
Besides, the rate of depreciation for all vehicles was revised and it was raised up to 30 percent for vehicles purchased up to March 2020, which is also expected to give a boost to the CV and PV players.
Brokerages opine that the steps will help the sector in the near-term.
Global brokerage Macquarie believes the steps will have a small positive impact on the near-term demand and the steps to improve liquidity and lower auto loan rates will benefit all segments.
"Higher depreciation rate and replacement of old vehicles by the government departments will benefit CV and PV," said the brokerage.
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