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Informist, Friday, Jan. 3, 2025

MUMBAI - Shares of automobile companies are expected to trade with a positive bias next week, after several automakers reported better-than-expected wholesale sales for December, despite a slowdown in retail demand after Diwali, according to analysts. Going ahead, the expectation of most automakers reporting healthy growth in earnings for the Oct-Dec quarter is also likely to act as a trigger.

This week, the Nifty Auto index closed 3.9% higher at 24005 points. In comparison, the benchmark Nifty 50 and BSE Sensex rose by 0.8% and 0.7%, respectively. Of the 15 stocks in the auto index, 11 stocks gained over last week while the rest declined. Maruti Suzuki India and Eicher Motors were among the top gainers. Apollo Tyres and MRF were among the worst performers.

"The Nifty Auto index delivered an impressive performance this week, driven by strong auto sales numbers that acted as a catalyst for the rally. The weekly chart indicates a confirmed double-bottom bullish breakout, suggesting the uptrend is likely to persist in the near term," said Rajesh Bhosale, technical analyst at Angel One. Next week, the auto index is expected to advance towards the 25000 mark, with immediate support seen at 23500 level.

"This sustained momentum could fuel additional gains for the auto industry, suggesting the potential for continued growth in the short term. With rising demand and market optimism, the auto sector is poised for further upside in the near future," said Brijesh Ail, head of technical and derivatives at IDBI Capital.

In the last three months, the Nifty Auto index has seen a good price-wise correction. The index has corrected to the 22700 level from around 27000 points at the end of September. "This space was oversold and needed a trigger for short covering. December auto sales were a mixed bag, but some of the legacy automakers reported better-than-expected wholesale numbers. This acted like a trigger. Going ahead, we expect auto stocks to enter a consolidation phase. It was a beaten-down sector and that's why we have witnessed a pull-back move," said Ruchit Jain, vice-president of technical research at Motilal Oswal Financial Services Ltd. 

In December, overall passenger vehicle sales grew 11% on year to 320,000 units, aided by pick-up in urban markets and hatchback volumes. In comparison, commercial vehicle despatches grew 6% on year, and tractor volume rose 10% on year. However, two-wheeler sales declined 10% on year because of weak domestic sales, but exports grew in strong double digits led by a recovery in African and Latin American markets. After the December sales announcements, the Nifty Auto index has gained nearly 6%. Going ahead, other than the Oct-Dec earnings announcements, analysts expect new launches during the Bharat Mobility Show and the upcoming Budget to be the next triggers for auto stocks. 

TOP HEADLINES
* Hero MotoCorp's total sales in Dec down 17.5% on year at 324,906 units
* HC stays arbitral award in favour of Ashok Leyland for six months
* Hyundai Motor reveals new EV Creta Electric
* TVS Motor's Dec 2-wheeler sales growth lowest since Jun, EV sales up 79% YoY
* Eicher Motors' Dec motorcycle sales rise 25% YoY as exports zoom 90%
* Ashok Leyland's domestic CV sales grow 4% in Dec, first time in 7 months
* Maruti Suzuki Dec total production 157,654 units, up 30.3% on year
* Honda Cars India Dec total sales 9,460 vehicles, down 19% on year
* Tata Motors sales flat at 78,164 units Dec; lower CV sales offset PV gains
* Rural sales help Maruti Suzuki register record-high retail sales in Dec
* Maruti Suzuki Dec sales up 30% YoY at 178,248 units led by small cars, SUVs
* Eicher Motors' Dec CV sales highest in FY25, exports up 53% on year
* Honda Motorcycle starts bookings for e-scooters ACTIVA e, QC1
* Hyundai's Dec despatches fall 2% on yr, exports down more than local sales
* M&M total automobile sales up 16% on year in Dec, tractor volumes up 20%
* Escorts Kubota's tractor sales fall in Dec, down for 2 consecutive months
* Bajaj Auto Dec local sales fall at quickest rate in 17 months, exports shine
* Two-wheeler despatches seen in slow lane Dec, PVs to post single-digit rise
* IPO Alert: Indo Farm Equipment raises INR 780.45 mln from anchor investors
* IPO Alert: Ather Energy gets SEBI's approval for fresh issue, OFS
* British firm's invest in M&M's EV arm to be INR 750 mln less than planned
* Maruti Suzuki's Dzire becomes its 4th model to cross 3 mln production mark
* M&M incorporates Ultrogen Hybren as step-down arm for green energy ops
* GST officials conduct inspection at M&M's premises in Chennai
* IPO Alert: Carraro India to list Mon; issue price INR 704 per share
* Hero MotoCorp extends pact with Harley-Davidson to expand pdt portfolio

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 and Gopika Balasubramanium
Edited by Ashish Shirke

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