The last 6-7 months have been a critical phase for the equity markets across the board. All sectors were beaten down to their lowest levels, but in the last few months, recovery was witnessed and most of them (5 out of 8 Nifty sectoral indices) outperformed the benchmark indices. And surprisingly, Nifty Auto was the one to leave the Nifty Pharma index behind to outperform the benchmarks' in the last 6 months.

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The auto sector has been reeling since the last two years and most analysts along with broker houses remained bearish on this space. To no one's belief, the auto index went ahead to register the most gains of them all, about 72 percent in the last six months as compared to the benchmarks' return of 33 percent.

Following Nifty Auto, the Nifty Pharma index posted 69 percent gains while Nifty IT jumped 59 percent. The lowest gains were delivered by the Nifty FMCG index, which rose only 10 percent in the last six months.

Back in March, investors who had sensed the wave of the rally in the auto sector would've easily doubled their investment so far. All auto stocks have surged over 50 percent in the last seven months.

In the last one month, Nifty IT rallied 12 percent, highest amongst its peers. While Nifty Pharma surged 7 percent. About 4 sectors underperformed as compared to the benchmarks including Nifty Bank, Nifty Metal, Nifty FMCG, and Nifty Realty.

What's driving the auto index recently?

At the beginning of September, the Centre had assured support to the leaders of the auto industry and listed out possible measures including scrappage incentive scheme and reduction in goods and services tax rate (GST rate) to revive the industry.

There were also rumours of government including auto components under the production-linked schemes (PLI).

Commerce minister Piyush Goyal had said at an annual convention that the PLI scheme would boost domestic manufacturing. He further added that the government was looking into signing trade agreements to allow Indian automakers to increase export in Europe.

Federation of Automobile Dealers Association (FADA) in early September felt that there was some recovery in the auto space due to the buying sentiment in the rural parts of India.

FADA president Vinkesh Gulati said that this trend will likely to continue throughout the festive season as rural customers usually prefer buying vehicles during this time. "And with lucrative deals and flexible payment options, automakers have the chance to rack up substantial sales during this festive season, fueling the auto sector's revival," Gulati added.