Shares in Maruti Suzuki and Mahindra & Mahindra gained on hopes of rising sales this month as part of the festival season.
Sharekhan said both Maruti and Mahindra & Mahindra will outperform the sector in the near-term, citing a "strong" order backlog, according to an email to clients.
Six models from the two companies, including the Maruti Dzire and the Mahindra XUV 500, have pending orders of about 170,000 units, or as much as 75 per cent of the average monthly passenger vehicle sales recorded in the broader sector, as per Sharekhan calculations.
A weakening Japanese yen is also helping Maruti Suzuki shares given expectations it will reduce the cost of royalty payments to Suzuki Motor.
Maruti shares gain 4.2 per cent, while Mahindra & Mahindra shares gain 1.5 per cent.
Copyright @ Thomson Reuters 2012