Nifty Auto gained 2% as Brent crude fell to around $72.5.
Maruti, M&M and Uno Minda led gains on easing cost pressures.
Lower oil prices boost auto demand outlook and sector profitability.
Auto and auto ancillary stocks witnessed strong buying interest on Thursday, with the Nifty Auto index emerging as the best-performing sectoral index after crude oil prices fell to pre-Iran conflict levels.
The Nifty Auto index rose as much as 2%, snapping its two-day losing streak during which it had declined 1.19%.
1 June 2026
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Auto ancillary manufacturer Uno Minda led gains among index constituents, rising more than 4%. Maruti Suzuki India and Mahindra & Mahindra also rallied sharply, advancing 3.71% and 3.13%, respectively, and featured among the top gainers on the Nifty50 index.
Other component makers joined the rally, with Samvardhana Motherson International gaining 3.66%, while Bosch Ltd rose 2.37%.
Hero MotoCorp Gains On Brokerage View
Hero MotoCorp climbed 3% after brokerage CLSA reiterated its "Outperform" rating on the stock and maintained a target price of ₹5,728, implying an upside potential of around 17% from the previous closing level.
CLSA said Hero MotoCorp offers an attractive risk-reward profile at current valuations. The brokerage noted that the stock is trading at around 15 times forward earnings and that current market valuations imply no volume CAGR and an EBITDA margin of 13.5% for FY27-28.
According to CLSA, factors such as a potential GST rate cut and Hero MotoCorp's upcoming scooter launches could help deliver a 5% volume CAGR over FY27-28.
The brokerage also highlighted the company's ability to maintain EBITDA margins above 14% while delivering positive volume growth over multiple cycles.
Importantly, CLSA said historical data does not show any meaningful correlation between rainfall levels and Hero MotoCorp's domestic two-wheeler sales growth, suggesting that concerns around a possible El Niño impact may be overstated.
Lower Crude Drives Sector Sentiment
Fourteen of the 15 stocks in the Nifty Auto index traded in positive territory, with Tube Investments of India being the only constituent to trade marginally lower.
The rally followed another decline in crude oil prices after tankers resumed movement through the Strait of Hormuz following the initial peace agreement between the United States and Iran.
Brent crude fell 1.7% to around $72.5 per barrel, extending recent losses and returning to levels seen before the escalation of tensions in West Asia.
Lower crude prices are generally positive for automobile manufacturers and ancillary companies because they help reduce raw material, logistics and transportation costs across the supply chain. Softer oil prices also help ease inflationary pressures, supporting consumer purchasing power and vehicle demand.
For India, the world's third-largest crude importer, sustained weakness in oil prices is viewed as a positive macroeconomic development, improving the outlook for both corporate earnings and consumption-driven sectors such as automobiles.
