Two-wheeler stocks surge up to 6% as budget boosts rural demand, EV push

The Nifty Auto index has shed nearly 15 percent in the last six months.

Shares of two-wheeler manufacturers rallied up to 6 percent on February 1 after the Union Budget 2025 introduced measures to revive rural demand and accelerate electric mobility. Investors reacted positively to announcements that could boost consumption and improve affordability in the sector.

"The government’s recent Budget announcements bring a new wave of optimism for India’s electric vehicle (EV) and sustainable transportation sectors. The National Manufacturing Mission, aimed at boosting domestic production of EV batteries and solar panels, will play a crucial role in fostering innovation and reducing reliance on imports," Rohan Dewan, Co-Founder of LeafyBus said.

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Hero MotoCorp, a key player in the rural market, jumped over 6 percent after the government announced revisions in income tax slabs and rural welfare schemes, increasing disposable incomes in smaller towns and villages. Analysts believe this could drive demand for entry-level two-wheelers.

Bajaj Auto climbed over 4 percent, supported by the Budget’s focus on electric models. The stock had been under pressure due to weak demand but saw a strong rebound following the announcements. Folliwng its Q3 earnings, Bajaj Auto's management said it is confident in solidifying its position as a leader in India’s electric two-wheeler market, driven by the recent launch of its Chetak 35 series, a slate of upcoming products, and robust demand for its sub-Rs 1 lakh offerings.

TVS Motor Company advanced by 3 percent, benefiting from Finance Minister Nirmala Sitharaman's announcement of a slew of initiatives to build an ecosystem for solar PV Cells & EV Batteries.

Ola Electric Mobility saw its stock price rise over 3 percent. The company, a pure-play EV major, is expected to gain from the expansion of the charging infrastructure and battery manufacturing push.

At the same time, the sector also called for continued support for electric vehicles, particularly through an extension of the FAME-III subsidy beyond March 2025. Direct incentives to build a robust EV supply chain, especially for batteries, were seen as essential to reduce import dependency and increase domestic value addition.

With consistent policy support, investments in advanced technologies, and efforts to make EVs more accessible, the two-wheeler industry is poised to play a pivotal role in shaping India’s mobility future. The budget is a critical opportunity to address challenges, build momentum, and steer the sector toward sustainable growth and innovation, say experts.

Over the past three months, shares of major two-wheeler players have been on a slippery slope. Hero MotoCorp, often considered the flagbearer of rural demand, has seen its stock tumble 20 percent. Bajaj Auto hasn’t fared differently either, with its shares shedding 18 percent, while TVS Motor has faced a 10 percent slide.

At about 1 pm, Nifty Auto was trading at 23,240, higher by 1.6 percent from the last close. The index has shed nearly 15 percent in the last six months.

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