Auto Stocks Outlook for the week - 19 to 23.May.2014
(www.rupeedesk.in)
(www.rupeedesk.in)
Stocks
of most automobile companies are likely to move sideways next week
as
euphoria over the Bharatiya Janata Party-led National Democratic Alliance's
victory
in the Lok Sabha polls has been priced in. This week, in the run-up to
the
announcement of the results yesterday, auto stocks rose 0.6-
12.5%.
According to the Election Commission of India website, the NDA is
slated
for a landslide victory. The general mood is that of optimism, but
fundamentally
nothing is going to change in the auto space in the next few
months.
Next week there could be some profit booking in some stocks. We've
seen
some of that already yesterday.
The
weak investment scenario of the past few years is likely to change with the
arrival
of the new government. The new government would likely take several
bold
steps to spur recovery in the infrastructure and manufacturing sector. As a
result,
in the medium-to-long term, the automotive sector, and especially the
commercial
vehicle segment is seen benefitting. Next week, Ashok Leyland
will
be in focus, as the commercial vehicle manufacturer will detail its earnings
for
Jan-Mar on Thursday.
We
continue to prefer Maruti Suzuki India, Hero MotoCorp and Tata
Motors.
However, Bajaj Auto, which detailed its Jan-Mar earnings on
Thursday,
is likely to be subdued over the next few days. The motorcycle
maker
disappointed the Street, posting a net profit of 7.64 bln rupees, down
0.2% year on year, and below expectations of 7.99 bln rupees.