Samvardhana Motherson, Sona BLW Precision and other auto stocks gain up to 7%: Here's why

Auto stocks are in focus in Thursday's trade as in the latest stride US President Donald Trump has decided to exempt US automakers from new tariffs on Canadian and Mexican imports for one month, the White House said Wednesday.

This is as it is inferred that the 25 per cent tariff imposed Tuesday will likely result in a price hikes on a range of imported goods, from food and alcohol to lumber.

Consequently, a host of stocks including Tata Motors and other auto ancillary stocks including the likes of Samvardhana Motherson and Sona BLW among others all gained up to 7 per cent as at the last count.

Donald Trump levied a 25 per cent tariff on all imports from Mexico and Canada starting Tuesday, but considering the likely impact and global meltdown the levy resulted into, Trump for the first time showed a softened stance.

Earlier also, these ancillary stocks posted a recovery as auto tariff imposition was paused for a month.

According to Elara, who wrote in a note last month that it is still unclear how OEMs will move their production base to avoid the increase in US car costs due to the tariffs. Mexico accounts for 4 per cent of Samvardhana Motherson's total income.

Likewise, Mexico accounts for about 2 per cent of Sona BLW's total sales, and although Mexico serves primarily as an assembly base, India handles the majority of the products' value addition. "If the end OEM shifts their production to US, this can be transferred to directly cater to US facilities," the note from Elara stated.