Hero MotoCorp, Maruti Suzuki and Eicher Motors were the only three stocks from the Nifty 50 pack to close with sharp gains in the challenging month of August.
As the domestic market oscillated between losses and gains, it finally closed the month lower as sentiment remained weak over higher US tariffs and sustained outflows from overseas investors.
While the proposed GST cuts across key categories lifted sentiment in mid-August, fears over their impact on government coffers led to a spike in bond yields, which in turn triggered a sharp fall in banking stocks, and the US Fed’s rate cut hopes have also failed to lift the tech stocks.
Against this backdrop, auto stocks revved up as sentiment improved on expectations that possible GST rate cuts could revive demand in urban India, which has remained sluggish in recent quarters.
Adding to the optimism were other supportive factors such as corporate tax cuts, a cumulative 100 basis-point reduction in the repo rate, the approaching festive season, and a healthy monsoon, all of which have strengthened the outlook for the auto sector. The industry’s limited dependence on exports also helped shield it from the recent sell-off.
Hero MotoCorp, Maruti stocks post solid gains
Hero MotoCorp finished the month with a sharp gain of nearly 20%, its biggest monthly gain since November 2023, propelling the stock to an 11-month high. After staying on the sidelines between September 2024 and February 2025, the stock made a strong recovery in the following months, gaining 50% from its March 2025 lows.
Maruti Suzuki also delivered a stellar performance, rising 17.3% in August, its biggest monthly gain since April 2020, as sentiment turned around on expectations that potential GST cuts would benefit the small car segment, which has been sluggish in recent quarters.
Sales of small cars, defined as those with engine capacity below 1200 cc for petrol and 1500 cc for diesel, not exceeding 4 meters in length, have slowed in recent years as buyers shifted to bigger, feature-rich SUVs.
The segment, which accounts for half of Maruti’s sales, has dragged down its market share to about 40% from over 50% in the last five years as demand for models like the Alto, Dzire, and Wagon-R dropped.
Eicher Motors also posted strong gains, rising 11.6% in August, marking its second-biggest monthly jump in 2025.
Strong Q1 GDP lifts markets; outlook stays mixed on tariffs: Experts
Domestic equities kicked off September on a positive note, supported by stronger-than-expected economic growth in the June quarter, with GDP coming in at 7.8%, ahead of market expectations of 6.7%, driven by robust domestic consumption.
Vinod Nair, Head of Research at Geojit Financial Services, said India’s resilience, underpinned by the strong Q1 GDP print and aided by government spending and policy measures, may provide a buffer against external headwinds, though fiscal concerns persist. A resolution of tariff disputes could serve as a key catalyst for market sentiment, although the reciprocal 25% tariff is likely to remain in place in the near to medium term.
He added that sectors directly exposed include textiles, equipment manufacturers, metals, autos, and seafood, while IT and pharma may face sentiment-driven pressure despite not being directly impacted by the tariffs.
In the near term, Nair expects markets to display a mixed bias. Consumption-driven and domestic growth-oriented sectors, such as FMCG, durables, discretionary, cement, and infrastructure, are well-positioned to benefit from GST cuts, firm demand, and higher government spending. However, limited progress in trade talks continues to weigh on investor confidence.