Auto Stocks Outlook
for the week – 19 to 23.09.2016
Seen range bound on
concern over Fed rate hike
Stocks of major automobile companies are seen trading in a
narrow range next week, with some
possibility of a correction as the market is yet to allay
the concerns of a hike in interest rate by the
US Federal Reserve later this month. Overall, however, bias
for the sector remains positive. Pay out
of arrears relating to the salary hike of government
employees and good monsoon rains are seen
lifting demand during Sep-Oct. Last week, the Society of
Indian Automobiles Manufactures revised
upward its projection for growth in sales of passenger
vehicles in 2016-17 (Apr-Mar) to double digit,
from 7-8% seen at the beginning of the year.
The CNX Auto index, which ended down 1.8% on week at
10117.95 points yesterday, is seen trading
sideways, in line with broader indices over the next few
sessions. Stocks of Maruti Suzuki India Ltd
are seen "overbought" but positive on the charts
for next week, backed by strong fundamentals and
a good order book. Analysts are also bullish on Tata Motors
Ltd in the long term but expect some
pull-back in the stock. Among two-wheeler companies, Hero
MotoCorp Ltd is seen consolidating at
current levels and analysts expect some pull-back in the
scrip. Stocks of Bajaj Auto Ltd and Mahindra & Mahindra Ltd are seen trading in a narrow range next
week.
