New Delhi, Aug. 19 -- Auto stocks continued to outperform on Dalal Street for the second straight day on Tuesday, August 19, following a stellar rally in the previous session. Investor sentiment improved towards the domestic-focused sector after the government's plan to lower GST rates lifted expectations that autos, currently under the highest tax slab of 28%, will benefit if the proposal is approved.

The proposed rate cut came as a relief for the auto sector, which has been under severe stress in recent quarters amid weak demand from urban consumers, higher tariffs, and a shortage of rare earth magnets.

To spur demand, companies offered heavy discounts, but that did little to improve sales, as prices remain higher due to multiple hike...