Auto Stocks Outlook for the week – 29.06.2015 to 03.07.2015
Under
pressure on weak Jun sales eyed, El Nino
( www.rupeedesk.in )
Automobile
stocks are seen under pressure through the coming week in wait of June sales
numbers to be announced by automakers, and in anticipation of below-average
rains in the sowing months of July and August. Auto sales are seen subdued this
month because of the sluggish rural market, which will keep the stocks in the sector
under pressure over the next 8-10 trading sessions. The country received 167.5
mm rainfall during Jun 1-26, 27% above the long-period weighed average of 132.2
mm, India Meteorological Department said. The weather department has forecast
the El Nino causing a negative impact on rains this year, which would pull down
the market at large, including auto stocks.
If
the El Nino does have a negative affect on rains, stocks of tractor
manufacturers such as M&M (Mahindra & Mahindra Ltd), and Escorts (Ltd)
will erase recent gains, and the short term outlook will change to negative. In
terms of sales numbers, Maruti Suzuki India Ltd is seen the top pick among
passenger car manufacturers as it is seen posting a single-digit on-year rise
in sales, backed mainly by a continued base effect due to the absence of its
Ciaz hatchback in the year-ago period.
The
automaker is also reaping benefits of the rise in petrol car sales vis-à-vis
diesel models, given the lower price difference between the two fuels now. Tata
Motors Ltd's scrip is seen facing muted action during the week, pulled down by
a fall in sales of its subsidiary Jaguar Land Rover, but supported by a
recovery in its own commercial vehicle segment. Benchmark index BSE Auto has a sideways
trend for the coming week.
