After opening the day firm, stock markets in India continued their momentum. Sectoral indices are trading on a positive note with stocks in the capital goods sector and oil & gas sector witnessing maximum buying interest.
The BSE Sensex is trading up 184 points (up 0.6%) and the NSE Nifty is trading up 57 points (up 0.6%). The BSE Mid Cap index is trading up by 0.9%, while the BSE Small Cap index is trading up by 0.8%. The rupee is trading at 63.85 to the US$.
Stocks from the automobile sector are trading on a positive note today. This comes as the GST Council raised the vehicle cess by less than the maximum possible limit on Saturday.
The GST Council on Saturday left untouched the rates on small cars and hybrid vehicles. But mid-sized cars will now attract a cess that’s 2% higher, large sedans 5% higher, and SUVs 7% higher. Initially, the cess was proposed to be raised by a maximum of 10%.
The above increase on mid and high segment cars approved by the GST Council will come into effect from today.
As per the news, the revised rates mean a partial reversal of the price benefits buyers enjoyed after the GST rollout.
The total tax incidence on vehicles in the midsized, large and SUV categories will be lower by 1.6%, 3.8% and 5.3%, respectively, as compared to pre-GST levels. However, luxury carmakers such as Audi, Mercedes-Benz and BMW will be more affected by the increase in the cess, as these companies had benefitted the most from the initial decline in total levies.
Automobile manufacturers may face some hiccups on the back of this development. Executives from auto industry have said that they may re-evaluate their business plans. Meanwhile, we’ll keep you posted on the recent developments from this space.
One shall note that the new generation of first-time buyers in India is moving up the ladder to premium cars. This is evident from the chart below:
