Auto Stocks Outlook for the week – 28.09.2015 to 01.10.2015
May
open up next week on RBI rate cut hope
( www.rupeedesk.in )
Stocks
of major automobile companies are likely to rise at the open next week due to anticipation
of a rate cut by the Reserve Bank of India at its upcoming policy review. A rate
cut, if it materialises, would help boost demand in the sector, just ahead of
the festive season. The RBI is scheduled to outline its fourth bi-monthly
monetary policy for 2015- 16 (Apr-Mar) on Tuesday. There has been a gradual
rise in the noise for a rate cut, given the steadily falling inflation levels.
Post RBI policy announcement, the measures taken by the central bank will set tone
for movement in auto stocks.
Stocks
are also expected to gain momentum due to expectation that sales have picked up
in September. Also, commercial vehicle orders may rise from next month as many
buyers had held purchases ahead of mandatory safety features to be introduced
from Oct 1. The government has made it must to install the anti-lock braking
system and the speedlimiting device in all commercial vehicles from Oct 1,
Prompting fleet replacement.
The
only drag on auto counters is likely to be the fallout from the Volkswagen
scandal, a key customer of some Indian parts maker. Volkswagen admitted to
rigging emission tests in the US, and this has had cascading effect on
companies supplying parts to it such as Motherson Sumi of India. Many more
countries have ordered a probe into Volkswagen vehicles. Hero Moto Corp is
expected to trade with a positive bias given an impending launch on Sep 29.
