Tata Motors, Ashok Leyland shares rocket up to 12%. Here are 2 reasons fuelling the sharp surge
Ashok Leyland and Tata Motors shares rallied, tracking a sharp fall in crude oil prices and a broader market recovery amid hopes of a negotiated settlement to the Iran conflict. Brent crude plunged nearly 9% in the previous session and extended losses on Thursday, easing fuel cost concerns for fleet operators.
Shares of commercial vehicle companies Ashok Leyland and Tata Motors surged nearly 12% on Thursday, following a significant drop in oil prices. The rally was driven by investor optimism surrounding a potential Iran deal, fueled by the Democrats' victory in the US midterm elections. Ashok Leyland shares reached Rs 172 on the BSE, while Tata Motors jumped 9% to Rs 440.
The drop in crude oil prices, which fell by over 10% in two days, positively impacted these companies as diesel costs, a major expense for fleet operators, decreased. Lower fuel prices improved operating economics for truck and bus owners, potentially encouraging fleet expansion, replacement demand, and fresh vehicle purchases. Additionally, lower fuel prices reduced input and logistics costs for automakers, supporting margins.
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