India’s EV Market gets a turbocharge with New Import tax cuts

Welcome Back Investor!

Foreign investors are making a bold comeback, injecting ₹19,686 crore into Indian equities in May, the highest monthly inflow since September 2024. This surge, driven by robust corporate earnings, favorable domestic fundamentals, and a softer US dollar, propelled the Nifty 50 and Sensex to seven-month highs. However, with global trade tensions simmering and a 90-day tariff truce nearing its end in July, the sustainability of this bullish momentum remains uncertain.

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IMPACT NEWS

India Unveils Game-Changing EV Policy But Tesla’s Not Biting

India just fired the starting gun in the global EV race. The government has finalized a groundbreaking new policy that slashes import taxes on electric vehicles from a steep 70% down to 15% but only for carmakers that invest at least $486 million and set up local manufacturing within three years. The goal? Attract global EV giants while jumpstarting India's domestic production ecosystem.

The scheme was widely seen as a Tesla magnet. Yet, in a surprising twist, Elon Musk’s EV empire reportedly isn’t interested in entering India under the current terms. That leaves the door wide open for European automakers like Volkswagen and Mercedes-Benz, who’ve already expressed interest in capitalizing on the tax break and tapping into India's fast-evolving electric mobility landscape.

Meanwhile, homegrown players aren’t exactly thrilled. Companies like Tata Motors and Mahindra which have invested years building EV capability under tougher conditions are pushing back against what they see as a tilted playing field. Their concern? The new entrants may flood the market with imports before setting up actual production, undercutting domestic efforts.

With EVs currently accounting for just 2.5% of India’s car sales, the stakes are high. Will this bold bet finally electrify India’s auto sector or simply spark another round of global competition? One thing’s certain: the road ahead just got a lot more interesting.

MARKETS

The markets played it safe today Sensex dipped 77 pts and Nifty slipped 34 pts, both showing mild consolidation. But the real action was in the broader space Nifty Midcap 100 surged 355 pts (+0.62%), and Nifty Bank clocked gains of 153 pts (+0.28%), signaling strong sectoral interest. Smart money seems to be rotating into midcaps are you riding the wave or stuck at the surface?
_{Closing figures as on 02.06.25 (3.30pm IST)}

🔎 In Focus

Stock Performance:

Top Gainers

✅ Adani Ports +2.46% Strong FY25 earnings, a ₹1 billion fundraise plan, and bullish technicals pushed the stock higher amid expansion optimism.

✅ M&M +1.65% Momentum continued after stellar Q4 results and buzz around upcoming EV launches, reinforcing investor confidence in future growth.

✅ Tata Consumer Products +1.27% Steady volume and expectations of portfolio expansion (especially in FMCG staples) drove interest from long-term institutional buyers.
✅ Eternal +1.21% Low-float counter with high volume activity sparked trader interest possibly linked to fresh fund inflows or speculative buying.

Top Losers

🔻 Adani Ports (+2.38%) The stock surged following the company's approval of a $1 billion fundraising plan to support its expansion strategy.

🔻 Mahindra & Mahindra (M&M) +1.65% M&M's shares gained after reporting a 17% year-on-year increase in total vehicle sales for May 2025, totaling 84,110 units.

🔻 Tata Consumer Products +1.27% The stock experienced a modest uptick amid positive momentum in the FMCG sector.

🔻 Eternal Ltd +1.21% Eternal's shares rose despite recent concerns over potential foreign investment outflows due to MSCI index weight adjustments.

INDIA FRONTIER

Everything else you need to know today

⚠️ Ripple: India's steel exports to the U.S. are minimal, so President Trump's plan to double tariffs on imported steel and aluminum to 50% is expected to have a limited direct effect. However, there's a possibility that countries more affected by the tariffs might redirect their excess supply to India, potentially impacting local steel prices and producers.

📉 Cooldown: India's manufacturing PMI dipped to 57.6 in May from 58.2 in April, marking the slowest improvement in operating conditions since February. While still above the neutral mark of 50, the slowdown is attributed to factors like intense competition, inflationary pressures, and geopolitical tensions.

🚗 Charge: Major international carmakers, including Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia, have expressed interest in manufacturing electric vehicles in India. This move aligns with India's new EV policy aimed at boosting local production and reducing emissions. Notably, Tesla has opted out of manufacturing in India, choosing instead to focus on imports.

🔻 Shakeup: Shares of Niva Bupa Health Insurance fell nearly 10% after a significant block deal involving 5.63 million shares. The sale, reportedly by stakeholders like Fettle Tone LLP and Krishnan Ramchandra, has raised questions about investor confidence and the company's future trajectory.

THE HANOOMAAN INSTITUTE

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Hanoomaan India Business team

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