Auto Stocks Outlook for the week – 07 to 10.10.2014

Auto Stocks Outlook for the week – 07 to 10.10.2014 )

Stocks of automobile manufacturers are seen moving in a narrow range with a positive bias next week, as most leading manufacturers reported growth in dispatches to their dealerships in September.

In the run up to the festivals season, most automakers were able to report good set of 
numbers, in terms of dealer dispatches in anticipation of increased consumer demand. The festivals season in India runs from Oct-Dec, and this is when a bulk of the automobile purchases in the country take place as consumer sentiment is buoyant.

Over the past few months, the sales trajectory of certain key vehicle segments, particularly
passenger cars and two-wheelers, has been positive, driving up stock valuations of companies such as Maruti Suzuki India, Hero Motocorp and TVS Motor Co.

Stock valuations remaining strong for automobile stocks in the near term, given the overall
demand buoyancy in the sector. These stocks have been outperforming broader indices over the past few months and this trend is seen continuing at least over the short to medium term. The broader markets saw some correction amid low volumes as investors stayed on the sidelines ahead of the five-day long break.