M&M, Bajaj Auto, other shares surge up to 2% as Auto index emerges as the top gainer: What's driving the rally?

Auto shares made strong gains on May 26, pushing the Nifty Auto index up over a percent to be the top sectoral gainer, extending the rise for a second session, riding on a brief respite from America's 50 percent tariffs on the European Union.

US President Trump on May 25 announced that he has postponed the imposition of 50 percent tariffs on European Union imports until July 9, after a phone call with European Commission President Ursula von der Leyen.

"We had a very nice call and I agreed to move it," Trump told reporters. The announcement came after Trump threatened to impose a 50 percent tariff on EU products starting June 1, 2025, accusing the block of systematically exploiting the United States through unfair trade practices.

Trump had announced a 25 percent tariff on automobile imports into the US in April, and later signed an executive order for some tariff relief, blending tax credits and waivers covering up to 15 percent of the value of vehicles assembled domestically.

The early onset of monsoon, which has hit multiple parts of South India has also added to the sentiment. The Centre expects above normal monsoon conditions to provide a significant boost to consumption and productivity in the upcoming financial year, reinforcing confidence in India’s growth momentum, senior government sources told Moneycontrol.

Mahindra & Mahindra (M&M) and Bajaj Auto shares were the top gainers on the index, rising over 2 percent to close at Rs 3,075 apiece and Rs 8,950 apiece respectively.

MRF and Tata Motors shares gained over 1.5 percent each, while Samvardhana Motherson and Hero MotoCorp shares jumped over 1 percent each.

Eicher Motors and Bharat Forge ended the session in the green with marginal gains.

Despite the uptrend in the market, Maruti Suzuki and TVS Motor shares closed in the red with marginal losses. Balkrishna Industries shares tumbled over 6 percent after the company reported a sharp 25 percent decline in standalone net profit for the March quarter and laid out an aggressive capex plan to diversify into competitive tyre segments.Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.