Auto stocks gain after government approves incentive package

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Shares of auto component makers rallied after the government approved a production-linked incentive program for auto makers. Shares of auto axle maker Jamna Auto rose more than 9% to an intraday high of Rs 93.70. Varroc Engineering grew 18%, GNA Axles grew 3%, Pricol grew 5%, Kranti Industries grew 4.3%, Motherson Sumi grew 2.4%, Sandhar Technologies grew 4% , Sona BLW Precision Forgings grew 3% and Minda Industries gained more than 1%.

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The measure of auto stocks on the National Stock Exchange, the Nifty Auto Index, rose 0.5 percent after the PLI program was announced.

The Cabin Union led by Prime Minister Narendra Modi has authorized a new Production Incentive Program (PLI) worth Rs 26,000 crore for the automotive sector to boost the production of electric vehicles and hydrogen vehicles. The PLI program will generate up to 7.5 lakh jobs for the automotive sector, according to government estimates.

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Last year the government announced the program for the automotive and auto components sector with an expenditure of Rs 57,043 crore, for a period of five years.

The PLI program for the automotive sector is part of the overall production-related incentives announced for 13 sectors in the 2021-22 budget with an expenditure of Rs 1.97 lakh crore.

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