Auto Stocks Snap 3-Day Losses as Citi Sees Growth Triggers

After three straight sessions of declines, auto sector stocks bounced back on Friday, supported by fresh optimism from brokerage firm Citi.

The Nifty Auto index rose nearly 1 percent in early trade, emerging as one of the top sectoral gainers. This recovery came after profit-booking, which had weighed on the sector in recent sessions. The earlier losses followed a strong four-day rally, driven by the GST Council’s decision to cut taxes on several categories of vehicles.

Citi Highlights “Trifecta” of Growth Drivers

In its latest report, Citi highlighted a combination of three macroeconomic triggers that it expects will boost the automobile industry beyond earlier growth projections.

According to Citi, the following factors form a supportive backdrop for the sector:

1. Income tax restructuring

2. Interest rate cuts

3. Recent GST rate revisions

The brokerage described these elements as a “trifecta of macro tailwinds” that can create a favorable environment for automakers in India.

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Price Target Revisions by Citi

Alongside its bullish outlook, Citi revised its price targets upward for three leading auto companies:

• Maruti Suzuki India Ltd – Price target raised to ₹17,500

• Mahindra & Mahindra Ltd (M&M) – Price target raised to ₹4,170

• Hyundai Motor India Ltd – Price target raised to ₹2,900

The brokerage also reiterated a “buy” rating on all three counters, with Maruti Suzuki remaining its top pick in the sector.

Stock Performance in Early Trade

The optimism from Citi’s report translated into gains across major auto stocks during Friday’s trade:

• Maruti Suzuki rose 1.53 percent to ₹15,326

• Hyundai Motor India gained 1.33 percent to ₹2,541.10

• Mahindra & Mahindra (M&M) advanced 0.5 percent to ₹3,612

All three companies have been consistent outperformers in recent weeks. Over the past month, their stocks have gained between 10 percent and 20 percent, underlining strong investor interest in the sector.

Nifty Auto Index Among Top Gainers

The Nifty Auto index stood out as one of the strongest performers in early trade. The rebound follows a period of volatility for the index:

• Four consecutive days of gains after the GST Council’s decision on tax cuts

• Three days of profit-booking that erased some of those earlier gains

• Friday’s rebound, supported by Citi’s upgraded outlook and sector-specific triggers

This movement reflects how policy announcements and brokerage research notes continue to play a crucial role in shaping short-term market sentiment within the auto space.

GST Cuts: A Key Catalyst

A major factor driving the earlier rally and the current optimism is the GST Council’s decision to reduce taxes on multiple categories of vehicles.

The rate cuts are seen as a direct boost to consumer affordability and demand for automobiles. Citi noted that these tax changes, when combined with interest rate cuts and income tax restructuring, could extend growth beyond its previous forecasts for the industry.

Citi’s Positive Sector Outlook

Citi’s note emphasized that the Indian auto industry is positioned strongly in the near term due to supportive macroeconomic policies. The brokerage highlighted:

• Income tax restructuring will put more disposable income in the hands of consumers.

• Interest rate cuts will make financing vehicles cheaper and more accessible.

• GST revisions reduce the cost burden on buyers, directly aiding affordability.

Together, Citi believes these measures can drive industry growth higher than previously expected, making auto stocks attractive investment opportunities.

Maruti Suzuki: Citi’s Top Pick

Among the three highlighted companies, Maruti Suzuki remains Citi’s top pick in the sector. The brokerage believes that Maruti’s market leadership and demand outlook position it strongly to benefit from the supportive macro environment.

With a raised price target of ₹17,500, Citi expects Maruti to continue leading gains in the Indian auto market.

Hyundai and M&M Also in Focus

While Maruti leads Citi’s preferences, both Hyundai Motor India and Mahindra & Mahindra were also upgraded with “buy” ratings and higher price targets.

• Hyundai Motor India saw its target lifted to ₹2,900. In Friday’s session, it traded at ₹2,541.10, up 1.33 percent.

• Mahindra & Mahindra (M&M) received a target of ₹4,170. Its shares rose 0.5 percent to ₹3,612 during the same session.

Both companies have also delivered strong returns over the past month, gaining in the 10–20 percent range, further reinforcing Citi’s confidence.

Strong Monthly Performance

Over the past month, Maruti Suzuki, Hyundai Motor India, and M&M have posted impressive gains. The stocks have risen between 10 percent and 20 percent, supported by favorable sectoral triggers such as tax cuts and positive demand outlook.

These gains demonstrate robust investor interest in auto companies and the expectation that policy measures will continue to support growth.

Investor Sentiment and Market Impact

The rebound in auto stocks and Citi’s positive outlook highlight the renewed investor confidence in the automobile sector. With multiple supportive factors in place, market participants are optimistic about sustained demand momentum.

The gains in the Nifty Auto index also underline the sector’s importance in driving overall market performance.

Key Highlights

• Auto stocks rebounded after three days of losses.

• Nifty Auto index rose nearly 1 percent in early trade.

• Citi highlighted three macro tailwinds: income tax restructuring, interest rate cuts, and GST revisions.

• Brokerage raised price targets for Maruti Suzuki (₹17,500), M&M (₹4,170), and Hyundai (₹2,900).

• Maruti Suzuki rose 1.53% to ₹15,326, Hyundai up 1.33% to ₹2,541.10, M&M up 0.5% to ₹3,612.

• Stocks gained 10–20 percent in the past month.

• Maruti Suzuki remains Citi’s top pick in the sector.