GOLDEN RULES FOR TRADING

Auto Stocks Outlook for the week – 07 to 11.09.2015

Auto Stocks Outlook for the week – 07 to 11.09.2015

Stocks of automobile companies are likely to continue tracking broader indices next week and trade under pressure due to the global economic environment showing signs of uncertainty. Global cues will overpower domestic trends in the near term because the auto sector does not have strong triggers of its own currently, the sales environment has also not been very positive.

Automobile sales for the month of August were not really positive, with most automakers presenting a muted growth, and some segments still declining. Motorcycle sales continue to be in the red, which would maintain pressure on stocks of two-wheeler manufacturers through the coming week.

Stocks of commercial vehicle manufacturers look better poised than peers. Adding that passenger vehicle stocks would still be preferred over two-wheelers. Benign fuel prices would be a marginal positive for automobile stocks.

We expect further downward correction in auto stocks over the next few sessions due to negative
outlooks expressed by senior management of various automakers during the annual conference of the Society of Indian Automobile Manufacturers.