Truck, tractor stocks rebounce post analysis of new overload norms

The stocks of freight vehicle manufacturers were pounded severely during the last trading session, but on Tuesday, the stocks were back in the green as the market delved into the details of the new guidelines.

In a notification issued late on Monday, the government revised the overload norms for medium and heavy commercial vehicles (MHCVs). The new guideline allows up to 25 per cent increase in load capacity for trucks and tractors.

The immediate effect of these norms is that heavy freight carriers can now legally carry the load that was earlier considered overload. This will, in turn, enable the speedy progression of infrastructure and affordable housing projects due to a reduction in freight costs.

Another effect is that these norms may have reduced the competitiveness of small freight companies and hence will stabilize freight rates. However, the government has ensured stricter implementation of overload laws after relaxation of limits.

Earlier on Monday, the heavy vehicle stocks plunged considering a dip in demand for new MHCVs. But on Tuesday, at 10:48 hours, the stock of Ashok Leyland was trading at Rs. 127.40 per share, up by 1.31 per cent, Tata Motors was at Rs. 255.90, up 1.73 per cent and Mahindra & Mahindra was at Rs. 908.00, up by 0.84 per cent.