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Informist, Friday, Sep 20, 2024

MUMBAI – Shares of automobile companies are expected to trade with a positive bias for the next few weeks, in anticipation of strong growth in retail sales during the festival season led by heavy discounts, according to analysts.

The strong growth in retail sales will help bring down passenger vehicle inventories at dealerships to an optimal level of 30–35 days, from alarming levels of 70–75 days in August. This and other developments, weighed on passenger vehicle makers' shares last month, said an analyst at a domestic brokerage. 

Further, anticipation of an interest rate cut announcement by the Reserve Bank of India has built up after the US Federal Reserve started its rate reduction cycle this week. All these factors are likely to drive auto stocks, the analyst said.   

Shares of automobile companies have been through a consolidation phase for the last month-and-a-half. While some two-wheeler companies' stocks have performed, other companies have largely struggled, said Ruchit Jain, a lead analyst at 5paisa. "This week, the auto index saw positive traction. It has closed above the important short-term resistance level of 26300. This should lead to positive moves in the overall auto space," Jain said.

"Companies such as Maruti Suzuki India and Mahindra & Mahindra, which have not broken their support level during the recent consolidation phase, are likely to see good momentum in the next two weeks, and the auto index could achieve previous highs. Positions will also get built up in anticipation of interest rate cuts in India. Interest rate-sensitive sectors such as auto and real estate could see some build up."

This week, the Nifty Auto index outperformed both the benchmark Nifty 50 and Sensex. While the auto index closed 2.2% higher at 26394.55, the Nifty 50 and Sensex gained 1.7% and 2%, respectively. Of the 15 constituents in the Nifty Auto index, eight declined over last week and the rest gained. While Mahindra and Mahindra and Samvardhana Motherson International were the top gainers, Exide Industries and Ashok Leyland were among the top losers. Next week, the Nifty Auto index's resistance is seen at 26700 and support at 25700.

TOP HEADLINES
* CARE upgrades Ashok Leyland's long-term bk facilities rating to AA+
* S&P Global cuts India 2030 e-vehicle share forecast to 18.5% from 22%
* Uno Minda board OKs setting up mfg units in Karnataka, Indonesia
* Three Tata group cos, Analog Devices sign MoU for semiconductor mfg
* PRESS: Maruti Suzuki plans to set up 25,000 e-vehicle charging points
* OLX, IDFC FIRST partner to offer used-vehicle financing options
* RattanIndia Ent's arm Revolt launches e-motorcycles RV1, RV1+
* CNBC-TV18: Bajaj Auto plans to up Chetak capacity to 40,000 units/mo
* India tractor sales down 6% YoY at 50,134 units, exports dn 3% in Aug
* Bajaj Auto launches Triumph Speed T4, MY25 Speed 400
* JBM Auto arm secures $100-mln funding from ADB, AIIB to supply e-buses
* PRESS: JSW MG Motor to launch 4 luxury cars in next 2 years
* TVS Motor sells entire 3.05 mln shares in arm TVS Digital
* IPO Alert: Kross shrs end 8.3% up after listing at 240-rupee IPO price
* TVS Motor launches new Apache RR 310 with cruise control
* M&M launches light commercial vehicle Veero at 799,000 rupees
* Honda unveils Apex edition of Elevate priced 15,000 rupees higher
* PRESS: Baba Kalyani's brother stakes claim to mother's property
* RattanIndia Ent in pact with Evolution Auto to launch EVs in Colombo
* ICRA ups Ashok Leyland long-term banking facilities, NCDs rtg to 'AA+'
* Ford plans to restart Chennai plant with focus on exports
* Data Alert: India Aug vehicle sales up 7% YoY led by 2-, 3-wheelers

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 Aditya Sakorkar

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