Shares of Eicher Motors rose by 23.7 percent in trade on Thursday, making it its biggest intraday gain since May 1999. The stock touched an intraday high of Rs 19,488 apiece, a Rs 3,736 jump in value and closed at Rs 17,860.
The surge came after Finance Minister Nirmala Sitharaman slashed the corporate tax on domestic companies to 25.17 percent, inclusive of all cess and surcharges. The new tax rate will be effective from the current fiscal year and is intended to promote growth and investment.
Additionally, shares of the maker of Royal Enfield motorcycles also increased in-line with other auto stocks as the market expects a cut in GST rate for the sector to push slowing sales. The BSE Auto Index also rose by as much as 8 percent ahead of the GST Council meeting scheduled for Friday where the automobile industry hopes for a reduction in taxes from 28 to 18 percent.
In August, the auto companies in India posted their eleventh consecutive fall in monthly sales. Analysts say that amid competition and weak demand, automakers will also have to face the difficulty of passing on the cost of upgrading to BS6 emission norms in the next financial year.