Auto stocks rally up to 140% in 2025. How smooth will the road be in 2026?
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What was widely expected to be a subdued year for automobile original equipment manufacturers and component makers has instead turned into a breakout one, laying the groundwork for what could be another robust 2026 as the full impact of recent policy moves begins to play out. The inflection point came earlier this year in September with the reduction in GST rates to 18% from the earlier 28–31% band. The move has ignited a broad-based demand revival across the auto ecosystem. What started as a price-led boost for consumers quickly translated into healthier dealer inventories, stronger retail momentum and a materially improved medium-term outlook for passenger vehicles, two-wheelers, tractors, commercial vehicles and auto components. With the Nifty Auto index now up 23% in 2025, investors are increasingly asking whether there is still fuel left in the rally as the sector heads into 2026. To put things into perspective, Maruti Suzuki, India’...