Auto stocks in demand after Budget keeps excise rate unchanged

Auto stocks rose over 4 per cent in early trade on the Bombay Stock Exchange on Tuesday, bolstered by the government's move to keep the central excise duty rate unchanged .

Shares of Bajaj Auto went up 4.62 per cent to an early high of Rs 1,327 on the Bombay Stock Exchange (BSE), becoming the top gainer among the BSE 30-Sensex stocks.

Market observers termed the Budget as positive for the automobile sector.

"Overall, the Union Budget 2011-12 is positive for the automobile sector as central excise duty has been kept unchanged. Further, special incentives have been announced for companies manufacturing hybrid vehicles in India," Angel Broking said in a note.

"Moreover, broader measures like increased focus on rural and infrastructure spending would support long-term growth of the sector," it said.

Auto bluechips attracted the most attention in early trade on BSE. Another major gainer was Mahindra & Mahindra, which rose 3.98 per cent to touch an early peak of Rs 638.60.

Tata Motors, Hero Honda and Maruti Suzuki also saw heightened buying interest from investors. Tata Motors rose 3.43 per cent, while the country's biggest car-maker Maruti gained 2.26 per cent and two-wheeler giant Hero Honda 2.22 per cent.

Similarly, TVS Motor Company soared 6.60 per cent to an early high of Rs 54.10.

Meanwhile, the BSE benchmark Sensex was up 215.06 points at 18,038.46 at 10.14 am.