Automobile Stocks Outlook for the week – 22 to 206.06.2015
(Short
covering likely in auto stocks)
( www.rupeedesk.in )
Stocks
of major automakers are seen tracking broader indices and are likely to trade
with a positive bias next week after downward correction in most of past one
month. While many automobile stocks fell as much as 10% in past one month,
there was some recovery this week, which is seen holding strong.
The
coming week, we would see some positive action as several auto stocks were
trading near their crucial support levels, and some short covering was likely.
A sector specific trigger for the industry would be rainfall, which has been
around 10% above normal so far. The automobile sector would hope for good rains
during July and August, which are essentially sowing months for the kharif
crop.
The
IMD (India Meteorological Department) has expressed concerns about rains in
July and August. If the first couple of days of next week have no change in
that forecast, auto stocks could be seen under pressure during the rest of the
week.
Stocks
of tractor manufacturers such as Mahindra & Mahindra Ltd would be affected
by the forecast of the monsoon to a great extent, as sales depend almost
directly on timely rains, translated as better revenues for farmers.
The
counter of Hero Motocorp Ltd is seen positive for the week owing to the company
revealing plans to launch two scooters in the country soon, along with a couple
of motorcycle refreshes. He chose Hero Motocorp as his among automakers for the
week.
