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Stocks of major automobile companies are seen falling in the week ahead, as the demand for vehicles is not seen picking up in near future. A combination of high interest rates and northbound fuel prices has kept consumers away from automobile showrooms, leading to a slowdown in overall demand. The weak demand scenario is not seen changing, dragging stocks of automobile manufacturers down.
Over the week, while the broader indices lost around 1.3%, the BSE auto index lost 1.8%. This happened despite stocks of all major automobile companies, barring Hero MotoCorp, gaining in yesterday trading session. Fundamentals of automobile stocks are seen weak due to the subdued demand outlook, and so investors may continue to sell this stock. The prospect of a good monsoon is, however, seen improving automobile sales in the near term, as it boosts rural income and urban consumers' sentiment. Over the past six months, major automobile manufacturers sold 30-40% of their vehicles in rural India.
