Auto
Stocks Outlook for the week – 16 to 20.03.2015
Stocks of major automobile manufacturers are seen in a
range next week in absence of sectorspecific triggers. However, there is a
minor positive bias because of a general improvement in vehicle sales. The auto
stocks will largely follow the broader market. Car (vehicle) sales have been
picking up, and that is expected to keep the general trend in the stock
positive. Vehicle sales, which were down for almost two years, have begun
showing signs of a turnaround, with motorcycles being the only category digging
into the red.
Passenger car sales rose 6.8% in February to 171,727
units, while motorcycle despatches fell 8.2% to 774,122 units. A poor monsoon,
along with delay in disbursement of MNREGA
(Mahatma Gandhi National Rural Employment Guarantee Act)
funds, has left the rural market in a financial crunch. Motorcycle sales in
India predominantly are accounted for by the rural market, with the urban
population having drifted to gearless scooters.
Bajaj Auto Ltd, with a heavy motorcycle portfolio, is
seen having another week with a negative trend. The company has seen its scrip
falling 24.4% since Nov 24, when it closed at 2,675.10 rupees on the National
Stock Exchange. Oil marketing companies are set to alter fuel prices Sunday and
a rise or fall would accordingly impact auto stocks during the week. A cut in
fuel prices is probable, with crude softening. So, that will be a positive for
the auto industry.
The coming week is seen positive for Maruti Suzuki India
Ltd after the scrip corrected during
the current week. The fundamentals of the automaker
continue to be strong.
