GOLDEN RULES FOR TRADING

Auto Stocks Outlook for the week – 16 to 20.03.2015

Auto Stocks Outlook for the week – 16 to 20.03.2015
  www.rupeedesk.in )

Stocks of major automobile manufacturers are seen in a range next week in absence of sectorspecific triggers. However, there is a minor positive bias because of a general improvement in vehicle sales. The auto stocks will largely follow the broader market. Car (vehicle) sales have been picking up, and that is expected to keep the general trend in the stock positive. Vehicle sales, which were down for almost two years, have begun showing signs of a turnaround, with motorcycles being the only category digging into the red.

Passenger car sales rose 6.8% in February to 171,727 units, while motorcycle despatches fell 8.2% to 774,122 units. A poor monsoon, along with delay in disbursement of MNREGA
(Mahatma Gandhi National Rural Employment Guarantee Act) funds, has left the rural market in a financial crunch. Motorcycle sales in India predominantly are accounted for by the rural market, with the urban population having drifted to gearless scooters.

Bajaj Auto Ltd, with a heavy motorcycle portfolio, is seen having another week with a negative trend. The company has seen its scrip falling 24.4% since Nov 24, when it closed at 2,675.10 rupees on the National Stock Exchange. Oil marketing companies are set to alter fuel prices Sunday and a rise or fall would accordingly impact auto stocks during the week. A cut in fuel prices is probable, with crude softening. So, that will be a positive for the auto industry.

The coming week is seen positive for Maruti Suzuki India Ltd after the scrip corrected during

the current week. The fundamentals of the automaker continue to be strong.