Several automobile stocks rose on Monday as the Production Linked Incentive scheme for the automobile sector is set to be announced this week, CNBC-TV18 reported.
Sources told CNBC-TV18 that the scheme which has been under works for nine months is likely to be approved in the next cabinet meeting.
Sources said that the scheme has been modified to promote new technologies and the revised draft could include the adoption of new technologies, as one of the conditions for availing incentives under the scheme.
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Instead of announcing the total outlay of Rs 57,000 crore, the government could first announce an initial allocation of approximately Rs 30,000 crore, the sources said.
Nifty Auto was up 0.6 percent with Eicher Motors, Bajaj Auto and Bharat Forge leading gains in the sectoral index on Monday.
Axis Securities in its report lately said that automobile companies expect demand and many stocks offer decent upside potential from the current levels, but the sector remains a mixed bag for now. This is because the lower-than-expected volume may result in weaker-than-expected profitability.
Meanwhile, rising input costs are wreaking havoc on automobile companies which may weigh on margins, the brokerage pointed out.
Maruti Suzuki India announced a price hike, effective from today, for select models due to higher raw material costs. The stock was 0.5 percent higher.