GOLDEN RULES FOR TRADING

Automobile Stock Outlook for the seek – 13 to 17.06.2016 (To take cues from economic data, monsoon progress)

Automobile Stock Outlook for the seek – 13 to 17.06.2016
(To take cues from economic data, monsoon progress)

The shares of major automobile companies are expected take their cues from key economic data, including the consumer price index-linked inflation slated to be declared on Monday.

A low CPI inflation will boost chance of a policy rate cut by the Reserve Bank of India, leading to lower loan rates. The bias on the auto index is positive in the short term. The Society of Indian Automobile Manufacturers on Thursday signalled a revival in demand in the rural markets.

The CNX Auto Index would also track the advance of the south west monsoon closely, and may reclaim the 8700-point mark soon. We remain upbeat on Maruti Suzuki in the long term, given the company's healthy product portfolio and robust order pipeline. The country's largest carmaker is seen opening the week on a strong note as it resumes production at its twin Haryana units.

Tata Motors, which led losses on the Nifty today closing down over 2.2%, may see brisk trading at its counters next week, as expectations of an above average monsoon kindle hops of further growth in the company's topline. The monsoon advance may also help Mahindra and Mahindra, in the upcoming week.