Tata Motors to MRF: Here’s why auto stocks are up for the second day

Shares of auto companies, including Tata Motors, Bajaj Auto, Samvardhana Motherson and MRF, traded higher on Tuesday, August 19. The Nifty Auto index gained 1%, while the Nifty EV index rose over 1%.One key trigger is news that China may lift restrictions on rare-earth magnets. The Chinese Foreign Minister has also assured India of addressing concerns over imports.

Currently, China controls nearly 70-80% of global rare-earth processing, and supply disruptions have already forced many Indian automakers to consider production cuts.

If the curbs are eased, EV-focused players such as Tata Motors, Mahindra and Ola Electric stand to benefit.On the other hand, hybrid-heavy OEMs like Maruti Suzuki, which depend more on PMSMs (permanent magnet synchronous motors), remain more exposed to supply risks.

Auto ancillaries such as Endurance, Motherson and Bosch India, which supply EV motors, steering systems and electronic components, are also closely linked to this trend.

Beyond rare-earth developments, the sector is supported by other tailwinds like the potential GST rate rationalisation across auto segments, in line with Prime Minister Narendra Modi’s Independence Day address promising “next-generation GST reforms” by Diwali this year.

Seasonal demand pickup ahead of the festive period.