Petrol prices cut: Auto stocks rally on bourses

The government's move to cut petrol prices by Rs 2.46 per litre, the second reduction in June, helped auto stocks gain some ground on the bourses on Friday.

Maruti Suzuki shares jumped 3.71 per cent to Rs 1,160 on the Bombay Stock Exchange (BSE) and was the top gainer among the blue-chip Sensex stocks. Mahindra & Mahindra was trading up 2.91 per cent, Hero MotoCorp (2.12 per cent), Tata Motors (2.06 per cent), Bajaj Auto (1.76 per cent) and Ashok Leyland (1.21 per cent).

Following the rally in these stocks, the BSE auto index gained 2.14 per cent to trade at 9,453.63 at 10.50 am.

The cut in petrol prices follows a Rs 2.02 a litre reduction effective June 3. Analysts said the price reduction will help the auto industry cut down on inventory pile ups and bring back buyers.

The automobile industry has been reeling under a demand slump as petrol vehicles found lesser buyers due to high price of the fuel, with more and more consumers opting for diesel vehicles.

Meanwhile, in the broader market, the BSE benchmark Sensex was trading 360 points higher at 12.02 pm, on overall positive sentiment on reports that the government would soon take steps to revive the economy.

With PTI inputs