Auto Stocks Outlook for the week – 23 to 28.02.2015
( www.rupeedesk.in )
Stocks
of major automobile companies are likely to continue to rise next week in the
run-up to the Union Budget for 2015-16 (Apr-Mar), and other factors such as
good Oct-Dec earnings and strong vehicle sales momentum. Automobile stocks are
seen rising in the run up to the budget on expectation of sops for the sector
given the government's emphasis on "Make in India”.
Automobiles
are the biggest sector of activity within the manufacturing sector,
contributing 6% to the country's gross domestic product. Companies from the
sector are seeking incentives for people to change cars every 15 years, which
will drive sales. They also expect the government to cut duty on all vehicle
classes. The government had cut duty on all vehicles by 300-600 basis points in
the Union Budget for 2014-15.
Manufacturers
have also sought an increase in the rate of depreciation on vehicles to 25% per
year,
from the existing 15%, to incentivise frequent vehicle replacements. The roads
and
highways
ministry has also sought elimination of duty on vehicles powered by alternate
fuels
such
as electricity and biodiesel, to encourage sales.
Two
wheeler companies, which have been riding a vehicle sales rush powered by
higher demand for scooters, are also seen up next week. TVS Motor Co's shares
are seen up on news the company's shares will be included in the CNX Auto index
with effect from Mar 27. Shares of the Chennai- based company will replace
those of automobile component maker Amtek Auto. Like its competitors Hero
MotoCorp and Honda Motorcycle & Scooter India, the company's scooters
portfolio has been leading its vehicle sales.
