However, analysts believe it will be negative as the policy has been made voluntary.
“FM unveils voluntary auto scrappage policy. Negative for auto stocks. Expectations were too high. Auto as a sector will make a cyclical top for the time being,” said Umesh Mehta of Samco Securities.
Nifty Auto stocks were trading on a positive note at 11:21AM (IST) on Monday. Shares of Mahindra & Mahindra (up 2.31 per cent), MRF (up 2.03 per cent), Ashok Leyland (up 2.03 per cent), Tata Motors (up 1.69 per cent), Maruti Suzuki (up 1.67 per cent), Bosch (up 1.66 per cent), Bajaj Auto (up 1.43 per cent), Motherson Sumi Systems (up 1.38 per cent), Balkrishna Industries (up 1.22 per cent), Hero MotoCorp (up 0.83 per cent), Bharat Forge (up 0.64 per cent) and TVS Motor Company (up 0.49 per cent) were among the top gainers.
While Exide Industries (down 1.42 per cent) , Amara Raja Batteries (down 0.94 per cent) and Eicher Motors (down 0.16 per cent) were the top losers in the index.
The Nifty Auto index was trading 1.22 per cent up at 9932.6 around 11:21 am.
Analysts were expecting the government to announce details regarding setting up of vehicle scrappage infrastructure which will be conducive enough for rolling out of scrappage policy in the near future. The Commercial Vehicle Industry was expected to be the biggest beneficiary of the same.
Clarity on provision of incentives for replacing old vehicles with new ones under the incentive based scrappage scheme was another demand from the industry.
They were also seeking clarity on product-linked incentive (PLI) scheme incentives to be provided to automobile OEMs and auto ancillary companies. Export focused companies were supposed to be the key beneficiaries of the same.