More Stories

Informist, Friday, Sep 6, 2024

MUMBAI - Shares of automobile companies are likely to trade with a negative bias, on account of modest growth in August retail sales, weak demand, and alarming levels of passenger vehicle inventory, according to analysts.

Stocks of most carmakers may continue to fall as demand remains lacklustre, leading to high inventory levels, according to analysts. In August, retail sales of passenger vehicles fell 4.5% on year and 3.5% sequentially to 309,053 units. The segment inventory reached alarming levels, with stock days now stretching to 70–75 days and inventory totalling 780,000 vehicles, valued at an alarming 778 bln rupees.

In August, dealerships sold a total of 1.89 mln vehicles, against 1.84 mln units in the year-ago period and 2.03 mln vehicles in July. While sales of two- and three-wheelers rose on year, volumes of passenger and commercial vehicles and tractors fell. On a sequential basis, retail sales declined across segments.

"The cyclical nature of the industry, combined with banks becoming cautious due to stress in the MSME (micro, small, and medium enterprises) and MFI (micro-finance institutions) sectors, has contributed to the slowdown. Additionally, higher interest rates are making vehicle financing more expensive, impacting demand," Krishna Appala, senior research analyst at portfolio management services Capitalmind Research, said.

Analysts have now pinned their hopes on the upcoming festival season and rising demand from rural areas, which could help to reduce the inventory levels. Such expectations may limit any downside in automobile stocks.

This week, the Nifty Auto index closed 2.5% lower on a week-on-week basis at 25527.15. Of the 16 constituents of the index, 13 declined and the remaining closed higher. While Hero MotoCorp and Balkrishna Industries were among the top gainers this week, Tata Motors and Samvardhana Motherson International were among the top losers. Compared to the auto index, the benchmark Nifty 50 and Sensex fell 1.5% and 1.4%, respectively, from a week ago. 

"In the coming week, a gradual dip is possible (in the Nifty Auto index), potentially testing the 25000 level, which could serve as a buying opportunity. On the upside, 26300-26500 remains key resistance zone. The two-wheeler segment appears stronger than the four-wheeler space and may outperform when the uptrend resumes," said Rajesh Bhosale, technical analyst at Angel One. 

TOP HEADLINES
* Gadkari says e-vehicle sector no longer needs subsidy, policy support
* Tata Motors' JLR UK sales rise 81% on year to 2,681 units in August
* High inventory, weak demand weigh on India retail vehicle sales Aug
* Sona BLW QIP opens, floor price set at 699.01 rupees/share
* IPO Alert: Kross Ltd sets price band at 228-240 rupees per share
* Minda Corp to make e-vehicle connecting systems with China-based Sanco
* PRESS: Final norms on steel recycling for vehicle manufacturers soon
* PRESS: Kant says 48% GST on hybrids, 5% on EVs to stay for long
* PRESS: Hero MotoCorp set to invest in electric 3-wheeler co Altigreen
* CIE Automotive buys 27% stake in Ijya Renewables for 25.5 mln rupees
* Honda Motorcycle Aug sales rise 13% to 538,852 units
* Maruti Suzuki August output rises marginally on yr to 168,953 units
* Tata Motors launches petrol, diesel Curvv starting at 1 mln rupees
* Uno Minda to acquire 49% stake in Minda Nabtesco for 13 mln rupees
* Bajaj Auto's total sales in Aug rise 16% on year to 397,804 units
* Kaynes Semicon gets Centre OK to set up semiconductor unit in Gujarat
* HDFC Bank, Jaguar Land Rover India in pact for auto financing
* Ashok Leyland's Aug sales 14,463 units, down 7% on year
* Maruti Suzuki cuts S-Presso LXI, Alto K10 VXI petrol car prices
* Hero MotoCorp Aug sales 512,360 units, up 5% on year, 38% from Jul
* M&M Aug sales 76,755 units, up 9% on year, 16% over July
* Escorts Kubota Aug tractor sales marginally up on yr at 5,614 units
* Maruti Suzuki Aug sales 181,782 units, down 4% on yr but up 4% on mo
* Tata Motors' Aug sales 71,693 units, down 8% on year, flat on month
* Hyundai Motor registers total sales of 63,175 units in August
* TVS Motor's August total sales up 13% on year at 391,588 units
* Honda Cars Aug sales 11,143 units, up 11% on year, 52% from July
* Eicher Motors Royal Enfield sales down 5% YoY in Aug, CV sales up 1%
* Craftsman Automation begins commercial ops at new Rajasthan plant
* Nomura sees India passenger vehicle sales down 3% in August
 

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Darshan Nakhwa 
Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.