Auto Stocks Outlook
for the week – 06 to 09.09.2016
Bias positive as
rains, salary hike drive sales
Stocks of major automobile companies are seen moving with an
overall positive bias in the near term
due to robust monthly sales that are seen improving further.
Sales of most automakers rose in
August. Payout of arrears of government salary hike and good
monsoon rains are also seen lifting
demand during the upcoming festive season. The CNX Auto
Index, which closed 5.4% higher on
week at 10052.95 points yesterday, may remain range-bound in
the next few sessions. Last month,
the government had approved recommendations of the Seventh
Central Pay Commission with
retrospective effect from Jan 1, 2016.
The government will have to fork out in excess of 340 bln
rupees on account of arrears for January
to July and salary payments for August. Shares of Maruti
Suzuki are seen "overbought" but looking
positive for next week, backed by strong fundamentals and a
good order book for its Baleno
hatchback and Vitara Brezza sports utility vehicles. Stocks
of M&M are also seen continuing its
positive run next week.