GOLDEN RULES FOR TRADING

Auto Stocks Outlook for the week – 29.12.2014 to 02.01.2015

Auto Stocks Outlook for the week – 29.12.2014 to 02.01.2015

Stocks of leading automobile manufacturing companies are seen flat next week tracking the broad market. The underlying bias is expected to remain bearish in week starting Monday due to heavy selling by foreign institutional investors.

Counters such as Mahindra & Mahindra and Tata Motors are likely to see further correction owing to weak despatches by these companies to dealers over the past few months. We expect shares of two-wheeler companies to do better than those of four-wheeler and commercial vehicle manufacturers, mainly due to sustained demand for their products.

Demand for two-wheelers, particularly scooters, is seen remaining at sustained levels. Scooters sales have been growing month-on-month for the past two years led by demand in urban India. Therefore, positive on Hero MotoCorp and TVS Motor Co. Hero MotoCorp is the second-largest player in the scooters segment, while TVS Motor Co is the third largest. There is buzz around stocks of Hero MotoCorp also due to the company's renewed focus on exports.