Auto Stocks Outlook for the week – 15 to 19.02.2016
(To
take cues from broad market next week; bias weak)
( www.rupeedesk.in )
Shares
of major auto companies are seen trading with a negative bias next
week,
taking cues from the broader market which has descended into
gloom.
Witnessing their biggest intraday fall since Aug 24 last year, the
National
Stock Exchange's Nifty 50 and BSE Sensex on Thursday
breached
the psychologically-crucial levels of 7000 points and 23000
points,
respectively, before closing at their lowest levels in 21 months.
The
Auto Index will see further downside to the tune of 3-4% next week.
Shares
of major automobile companies closed at a discount of anywhere
between
2% and 31% this week, as against a week ago.
Among
the major laggard was Maruti Suzuki, which plunged 31% this
week
to close at 3549.65 rupees. In the short-term, the stock might look
weak,
but has bright long-term prospects, backed by strong sales pitch
and
new products. The negative bias is likely to continue next week.
Maruti
Suzuki unveiled the Ignis hatchback and the Brezza sports utility
vehicle
at the recently-concluded Auto Expo, and has begun taking
bookings
for the latter, which marks its entry into the sub-4 metre
compact
SUV segment.
We
are expecting the company, remains under pressure on account of
poor
performance in the domestic passenger vehicle market. The
company's
Jaguar Land Rover subsidiary's operational performance is
also
under the scanner. During Oct-Dec, Tata's Motors' UK-based
subsidiary
reported a net profit of 440 mln pound sterling, 26% lower
than
last year, largely due to lower sales in China.
