The Nifty Auto index rose 1.83% to 26,246.85, outperforming the Nifty 50 which gained 0.54% to close at 24,849.50.
Mahindra & Mahindra led the rally with a 5.85% jump, followed by Eicher Motors up 2.02%. TVS Motor rose 1.21%, Bajaj Auto gained 1.05%, and Balkrishna Industries added 0.96%. Hero MotoCorp climbed 0.93%, MRF advanced 0.75%, and Tube Investments of India gained 0.73%. Tata Motors was up 0.51%, Bosch added 0.46%, Motherson rose 0.20%, while Bharat Forge inched 0.10% higher.
In contrast, Maruti Suzuki slipped 0.50% amid profit booking.
The GST Council on Wednesday announced sweeping changes in tax rates for the automobile and two-wheeler sector. GST on small cars and motorcycles with engine capacity up to 350cc has been reduced from 28% to 18%, a move aimed at boosting demand in the mass mobility segment. Additionally, parts and accessories of motorcycles up to 350cc will now attract 18% GST instead of 28%.
On the other hand, the levy on premium motorcycles exceeding 350cc has been sharply raised from 28% to 40%, making high-end bikes costlier.
The new rates, effective 22 September 2025, are intended to rationalize the tax structure, encourage affordable mobility, and provide relief to middle-class consumers.