GOLDEN RULES FOR TRADING

Auto Stocks Outlook for the week – 20 to 22.10.2014

Auto Stocks Outlook for the week – 20 to 22.10.2014

Stocks of automobile companies are seen trading in a narrow range next week,
which will have lesser sessions than normal. Automobile manufacturers' stocks have
seen sell-offs over the past few weeks, in line with broader domestic equity
markets. Equity markets will have a truncated week ahead on account of Diwali and
Balipadyami Diwali festivals.

While there will be overall weakness in automobile stocks over the next week, some
counters such as Ashok Leyland are expected to perform better and gain some
value, as their current value is attractive. Ashok Leyland is seen gaining from
acceleration in economic activity, which would lead to greater purchase of
commercial vehicles. We sees the company's medium and heavy commercial
vehicle sales growing 13.3% in the on going financial year, it said in a recent report
on the company.

Bajaj Auto Ltd's stocks are seen falling as the company's Jul-Sep earnings, declared
earlier this week, were below market estimates. Over the past week, broader
indices lost around 1%, while the BSE's Auto Index fell nearly 2%. High beta stock
categories such as information technology, financial services and automobiles have
seen sell-offs and this is expected to continue for most stocks in these industries over the next week.