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Informist, Friday, Apr. 11, 2025

MUMBAI – Shares of automobile and component makers will likely fall next week if escalations in the trade war between the US and China affect the overall market sentiments, analysts said. The rising tensions may lead to complications in the global supply chain, which may affect component makers who export not just to the US but to other markets as well, analysts said. The focus may also shift to the outlook on monsoon as growth in rural demand depends on how strong the rains are, analysts said. India Meteorological Department is likely to announce its long-range forecast on the southwest monsoon in April.

Friday, the Nifty Auto closed at 20548.65 points, up over 2%. During the week, the index has fallen 0.2%. In comparison, the Nifty 50 and the BSE Sensex fell 0.3% each. Apollo Tyres was the top gainer during the week, while Bosch was the worst performer in the sectoral index.  

The valuations of automobile and auto ancillary companies are fair now post the recent correction after the US imposed 25% tariffs on passenger vehicles imported into the country, an analyst at a domestic brokerage said. Tata Motors especially can be considered at current levels as any sharp downside is limited, the analyst said.   

Auto-component makers, which have significant exposure to the US such as Sona BLW Precision Forgings, Samvardhana Motherson International, Balkrishna Industries and Bharat Forge may see some pressure if there is any reversal of the pause of tariffs. For Sona BLW, 40-45% of revenue comes from exporting to the US. Balkrishna Forgings and Bharat Forge also depend on the US for 20-35% of revenue, Geojit Financial Services said in a research report last week.

Some of the focus will also shift to corporate earnings as the earnings season began Thursday with Tata Consultancy Services announcing results. According to an Informist poll, the six automobile companies in the Nifty 50--Bajaj Auto, Eicher Motors, Hero MotoCorp, Mahindra & Mahindra, Tata Motors, and Maruti Suzuki—together are expected to post a 6% on-year growth in revenue in Jan-Mar. The combined net profit of these companies will likely fall 33% on year. 

There could be underperformance in select players such as Bajaj Auto and Hero MotoCorp, Ajit Mishra, senior vice-president, technical, fundamental, and commodities – research at Religare Broking, said. Eicher Motors, TVS Motor Co., and Escort Kubota may see some recovery, he said. M&M could be an outperformed, Mishra said. He expects Nifty Auto to find support at 19800-19000 points and face resistance at 21000-21900 points.

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Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Gopika Balsubramanium

Edited by Saji George Titus

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