Auto Stocks Outlook for the week – 12 to 16.12.2016
Auto Stocks Outlook for the week – 12 to 16.12.2016
The stocks of major automobile companies as seen falling next week as the long-term outlook for the sector looks
grim due to sustained cash crunch. Gains in the stocks of major automobile companies in the last few trading
sessions, largely due to gains in the broader market are, however, unlikely to sustain. The long-term outlook for the
sector has been hit following the withdrawal of old currency notes of 500 rupees and 1,000 rupee from circulation as
it has affected the sales of all automobile companies. Data by Society of Indian Automobile Manufacturers showed
that auto sales in November declined most in 43 months largely due to "disruption" in the sector caused by
demonetization. Vehicle sales in the domestic market in November fell 5.5% on year to 1.56 mln units, SIAM data
showed.
The industry practice of offering discounts in December to clear inventory may add to the weakness in automobile
stocks as companies are offering higher-than-usual offers this month to offset the impact of low sales last month.
Over the last three months, other factors such as higher pay for government employees and a near normal monsoon
this year played major role in keeping the demand outlook for the auto sector robust. However, the momentum was
snapped following the government's move to withdraw legal tender of old 500- and 1,000-rupee notes on Nov 8.
Stocks of Maruti Suzuki India Ltd, which has seen some pullback in the last few trading sessions, may see some
correction as they still look weak on charts. Stocks of two-wheeler companies also look week on charts, despite
some pullback by Hero MotoCorp Ltd and Bajaj Auto Ltd in the last few sessions. We expect stocks of Hero
MotoCorp Ltd to remain under pressure with little chance of an upside. Stocks of Bajaj Auto Ltd and Mahindra and
Mahindra Ltd are seen consolidating at the current levels.
Free Intraday Tips : Join Our Whatsapp No : 9841986753
Free Commodity Tips : Join our Whatsapp No : 9094047040
Auto Stocks Outlook for the week – 12 to 16.12.2016
