New Delhi, Aug. 22 -- The Auto index has soared over 5 percent this week, driven by reports suggesting that the auto sector could see a reduction in the Goods and Services Tax (GST) rate for small cars and two-wheeler internal combustion engine (ICE) vehicles to 18 percent from the current 28 percent.

The potential GST cut has sparked optimism in the market, with brokerage Nomura identifying Mahindra & Mahindra, Maruti Suzuki, Ashok Leyland, and TVS Motor as the biggest beneficiaries. According to the brokerage, such a reduction could trigger a strong rally in Indian auto stocks.

Nomura said, "Our scenario analysis considers three possible outcomes in the event of a GST reduction, with varying degrees of demand impact. We see scope for ...