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Informist, Friday, May 23, 2025

MUMBAI – Shares of only some automobile companies look bullish over the near term and the focus will primarily be on two-wheeler and tractor-makers as the upcoming monsoon season could potentially lead to a demand spike for these vehicles, analysts said. Focus will also be on Bajaj Auto, which is scheduled to detail its financials on Thursday. The company would be last one to report its March quarter earnings among the Nifty Auto index. 

The Rajiv Bajaj-led company is expected to report a net profit of INR 20.29 billion, up nearly 5% on year, and its revenue from operations is expected to grow a tad over 2%.  

On Friday, the Nifty Auto index closed slightly higher at 23515.25 points. The index closed 1.8% lower on a week-on-week basis, snapping a five-week winning run. Bajaj Auto and MRF were the top gainers in the sectoral index. Maruti Suzuki India and Mahindra & Mahindra fell the most in the week among the nine stocks which closed in the red. 

While fundamental analysts believe the downside is limited for most stocks due to fair valuations, technical analayts are of the opinion that the near-term view for these stocks still look bearish. The technical analysts expect the Nifty Auto to fall to up to 22600 points before advancing to 24000 points.   

Two-wheeler makers and tractor-makers remain the top picks in near term owing to a likely strong recovery in rural demand. Tractor demand may pick up in the coming months as farmers start their crop cultivation with Kharif season, analysts said. M&M is expected to benefit the most, followed by Escorts Kubota, they said.

Two-wheelers sales may also pick up in the coming months due to demand from marriage season in May-Jun, analysts said. Demand recovery from rural markets will also help two-wheeler makers increase their sales. Hero MotoCorp will likely benefit from this given its extensive presence in rural market, however, the stock has lost investor confidence due to management transitions, analysts said. 

On the demand for passenger vehicles, analysts said it is unlikely that sales of entry level cars will pick up in the coming months. However, the positive macroeconomic factors such as income tax breaks and interest rate cuts may sway people to opt for these models. Even then, the preference for compact sport utility vehicles may limit the sales of entry level cars, they said. Though M&M remains analysts' overall top pick in the sector, they said the valuation is stretched, as is the case with Maruti Suzuki India. 

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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 Balasubramanium

Edited by Akul Nishant Akhoury

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