Tata Motors, Mahindra & Mahindra, Maruti: Here's Why Auto Stocks Gained Today

Auto stocks traded higher on Tuesday, April 15 after US President Donald Trump signalled that he might exempt tariffs on auto imports. The Nifty Auto index, which tracks 15 automobile sector stocks, rose as much as 3.54 per cent today, led by gains in major auto and auto component manufacturers like Samvardhana Motherson International, Bharat Forge, Balkrishna Industries, Tata Motors and MRF.

Trump on April 14 had announced that he was considering a temporary pause on the 25 per cent tariffs he had imposed earlier on the sector. He said that carmakers need time to reallocate their production to the US. "They need a little bit of time because they are going to make them here," Trump said while speaking at the White House.

Trump had earlier imposed a 25 per cent tariff on the automobile sector on March 27 and had announced that it would be permanent. However, now he seems to be backtracking. Trump had previously backtracked from the tariffs he imposed on April 2 on the US's major trading partners by announcing a 90-day pause.

Smavardana Motherson Lead Auto Gains

Shares of Samvardhana Motherson, India's largest auto parts maker by market capitalisation, zoomed as much as 10 per cent. Following it, Bharat Forge and Balkrishna Industries jumped up to 7 per cent and 6 per cent, respectively. Heavyweights Mahindra & Mahindra, Maruti Suzuki India and Tata Motors gained between 3 per cent to 5 per cent.

All other constituents of the index, including MRF, Bajaj Auto, Eicher Motors, Hero MotoCorp, Ashok Leyland, and TVS Motor among others traded in the green, as of the time of filing this report.

Nifty Auto Underperforms Nifty 50

The Nifty Auto index had slipped over 11 per cent since Trump announced the auto tariffs in late March. However, the index has recovered from the lows and currently trades 2.3 per cent lower since the pre-tariff announcement level.

The index has yielded a negative return of 8.3 per cent so far this year. Meanwhile, Nifty 50 delivered a negative return of 1.8 per cent. Over a year, the Nifty Auto index returned a negative 2 per cent, significantly underperforming Nifty 50, which surged 4.7 per cent during the same time period.