Automobile shares remained in focus for the second straight day on Thursday, as investors assessed the growth prospects of the sector struggling against high taxes and raw material prices. Major stocks in the sector moved on a mixed note in the first half of the session.

Share Market Live

NSE

While Maruti Suzuki was down 1.44 percent, TVS Motor 1.29 percent, Ashok Leyland 0.76 percent and Hero MotoCorp 0.44 percent. Mahindra & Mahindra was up 1 percent, whereas Tata Motors and Bajaj Auto were flat.

The Nifty Auto index -- which gauges the performance of 15 major stocks in the sector -- fell as much as half a percent. The sectoral index is up less than 7 percent so far this year, lagging Nifty50's 19 percent return.

Also read: Passenger vehicle wholesales rise 45% in July; two-wheeler sales up

On Wednesday, the government ruled out the possibility of interventions for the auto sector after manufacturers pitched for tax relief citing recent price hikes.

Revenue Secretary Tarun Bajaj said he wanted to understand from automakers why vehicle sales have been tepid over the last few years and whether it was just due to high taxes or there were other reasons.

Auto companies have for years lobbied for lower GST tax rates, which they say could help boost sales.

"What is the tinkering we can do to see to it that certain (vehicle) segments get the encouragement they deserve," said Bajaj. The revenue secretary was speaking at a conference organised by industry body Society of Indian Automobile Manufacturers (SIAM).

Also at SIAM’s annual convention, Union minister Nitin Gadkari said the Centre is looking to increase the contribution of the automobile sector to the country’s GDP to 12 percent from 7.1 percent now, and boost employment generation to 50 million from 37 million. Gadkari also called the country's auto industry a vital player in the government’s vision to make India a $5 trillion economy.

The GST tax rate on automobiles in the country is as high as 28 percent, on top of which other taxes are imposed by states. According to company executives, this makes vehicles expensive for many buyers, especially as high raw material prices, and upgrades to meet tougher rules have already boosted prices.

Catch all market updates here