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Informist, Thursday, Sept. 4, 2025

By Akash Mandal 

MUMBAI – Traders added bullish bets to the options chain of Mahindra & Mahindra after the stock surged on the government's goods and services tax relief. On a fundamental level, Mahindra & Mahindra looks poised to be among the biggest beneficiaries, with the company having a significant exposure in the farm, sport-utility vehicles, and small vehicles segments, analysts said. 

The stock closed 6% higher at INR 3,481.50 Thursday after hitting a record high of INR 3,550 on the National Stock Exchange amid the optimism towards the automobile sector following the tax relief. On the call side, the INR 3,600 strike saw the highest addition of open interest of 195%. The premium on this strike rose 307% to INR 45.20. Traders also bought the INR 3,700-INR 3,900 strikes. 

On the put side, the highest open interest addition was at the INR 3,500 strike and the highest concentration was at the INR 3,400 strike. The stock saw a breakout on the technical charts and may test the INR 3,600-INR 3,700 levels in near term, a derivatives analyst said. 

Around 40% of the company's sport utility vehicle portfolio will fall under the 18% tax bracket, with the rest falling in the 40% bracket, CNBC-TV18 reported, citing Mahindra group Chief Executive Officer and Managing Director Anish Shah. As of the June quarter, the automaker had a market share of 27.3% in the SUV category. It had a market share of over 54% in the light commercial vehicle segment. Over half the company's bottom line during the quarter came from the farm equipment segment.

The GST Council Wednesday reduced the tax on small cars, with engines below 1200 cubic centimeter, to 18% from 28% effective Sept. 22. While it increased the GST on mid-sized and big cars to 40% from 28%, the compensation cess was removed. These cars were earlier taxed at 45-50%, including the cess. Tax on tractors and agricultural machinery was cut to 5% from 12%. 
 

However, analysts remain cautious on the automobile sector and will monitor how much the demand for automobiles will grow on the back of the GST reforms  during the upcoming festival season. CRISIL Intelligence sees prices of compact and mid-sized SUVs dropping 3.5%. It said prices of premium SUVs and multipurpose vehicles with engines less than 1,500 cc will fall 6.7%.

Gains in the overall market are expected to be limited in the near term, going by to options data, with the market factoring in most of the likely benefits from the GST rationalisation. The Nifty 50 had gained nearly 2% post the GST rationalisation announcement on Aug. 15. "Today, the benchmark indices witnessed profit-booking at higher levels...we are of the view  that the short-term market outlook remains positive; however, a fresh uptrend rally is possible only after crossing the 24850 level," Shrikant Chouhan, head of equity research at Kotak Securities, said in a note. 

The Nifty 50 Thursday closed at 24734.30 points, up 0.1%, having gained over 1% intraday. On the call side, traders added short bets between the 24800 and 24950 strike prices, with the highest open interest addition as well as concentration at the 24900 strike price.

--Nifty 50 Sept closed at 24836.00, up 22.90 points; 101.70-point premium to the spot index

--Nifty 50 Oct closed at 24953.00, up 20.00 points; 218.70-point premium to the spot index

--Nifty 50 Nov closed at 25076.20, up 23.80 points; 341.90-point premium to the spot index

Mahindra & Mahindra, Bajaj Finance, HDFC Bank, Maruti Suzuki India, ICICI Bank, Reliance Industries, HDFC Life Insurance Co., Hindustan Unilever, Eternal, ITC, Tata Motors, Hero MotoCorp, Britannia Industries, Eicher Motors, and Trent were the most active underlying stocks Thursday.  End

Edited by Avishek Dutta

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