GOLDEN RULES FOR TRADING

Auto Stocks Outlook for the week – 23 to 27.05.2016 (Seen range bound; Bajaj Auto Jan-Mar results eyed)

Auto Stocks Outlook for the week – 23 to 27.05.2016
(Seen range bound; Bajaj Auto Jan-Mar results eyed)

Stocks of major automakers are expected to trade range-bound in the week ahead, with Bajaj Auto's earnings for Jan-Mar expected to give direction to stocks. The Pune-based automaker is expected to announce its earnings for the quarter ended March on Wednesday. Healthy growth in volumes, led by a better product mix and benign input costs, are likely to lift Bajaj Auto's net profit for Jan-Mar by 29.7% on year to 8.06 bln rupees.

The company's net sales for Jan-Mar are seen rising 14.7% on year to 53.02 bln rupees. Other sector heavyweights Tata Motors and Mahindra & Mahindra are expected to announce their Jan-Mar earnings on May 30, which will guide automobile stocks in the near term. Stocks of Maruti Suzuki India are expected to give up some gains made over the past few sessions, as the company has recalled 20,427 units of its S-Cross crossover vehicle. But analysts remain largely positive on the company's shares in the long run due to its petrol-heavy portfolio of vehicles. Given the successful new launches, a shift in demand to petrol variants, the forecast of a good monsoon, and implementation of the Seventh Pay Commission's recommendations.