Maruti Suzuki India (up 3.49%), Tata Motors (up 2.99%), Mahindra & Mahindra (up 1.84%), Hero MotoCorp (up 1.4%), Escorts (up 1.22%) and Bajaj Auto (up 1.2%), edged higher.
The BSE Auto index was up 1.84% at 9,309.16. It outperformed the Sensex, which was up 185.43 points or 1.11% to 16,853.44.
According to reports, this will be the second price cut in the month after the Rs 7.54 increase last month triggered strong political opposition. On 2 June 2012, petrol was brought down by Rs 2.02 to Rs 71.16 a litre in the capital.
Shares of automobile firms also rose on hopes the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial output grew just 0.1% in April 2012.
Car sales in India rose an annual 2.8% to 1,63,229 units in May 2012, according to data from released by the Society of Indian Automobile Manufacturers (SIAM) on Monday. Sales of trucks and buses rose 9.1% in May to 62,025 vehicles. Motorcycle sales rose 7.2% to 887,634 vehicles.