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Informist, Friday, Sep 27, 2024

MUMBAI – Shares of automobile companies are likely to retain their positive momentum next week, as investors expect strong growth in sales during the festival season in September, and anticipate an interest rate cut by the Reserve Bank of India, according to analysts. Automobile companies will release their wholesale numbers for September on Tuesday. 

This week, the Nifty Auto index outperformed both the benchmark Nifty 50 and the Sensex. While the auto index closed 4.6% higher on a week-on-week basis, the Nifty 50 and the Sensex gained 1.5% and 1.2%, respectively. Of the 15 constituents of the Nifty Auto index, 12 gained over last week and the rest declined. While Mahindra and Mahindra and Maruti Suzuki India were the top gainers, Bharat Forge and Balkrishna Industries were among the top losers. Next week, resistance for the Nifty Auto index is seen at 27800 and support at 27000. 

"The auto index resumed its uptrend last week. Earlier, the rally was concentrated on only fewer two-wheeler companies, but this week heavyweights such as Maruti Suzuki India and Mahindra & Mahindra saw strong momentum," said Ruchit Jain, a lead analyst at 5paisa. Further, "after the interest rate cut announcements by the central banks of the US and China, investors expect the RBI to do the same. This is the reason why there has been buying interest in sectors that are linked to interest rates," he said.

"In the near term, this rally in the Nifty Auto index is expected to continue, with the 29,000 mark in sight. Any dips can be seen as buying opportunities, with 27,000 serving as support," said Rajesh Bhosale, technical analyst at Angel One.

According to Jain, the auto index has rallied significantly this year, and is near the overbought zone. This usually leads to a price-wise dip or time-wise correction. So investors should start booking profits at current levels, he said. The Nifty Auto index has gained 48.4% between January and September.

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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 Avishek Dutta

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