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Auto Stocks Outlook for the week – 23 to 27.01.2017

Auto Stocks Outlook for the week – 23 to 27.01.2017


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Auto Stocks Outlook for the week – 23 to 27.01.2017

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Stocks of most automobile companies are likely to trade with a negative bias next week as traders continue to book profits. While all stocks in the Nifty Auto index are expected to fall more, Hero MotoCorp Ltd is seen declining the most. The correction in the shares is likely to stay for a short term. In the long term, analysts are bearish on two-wheeler companies and commercial vehicle manufacturers. The resulting cash crunch from the government's Nov 8 decision to demonetize high-denomination currency notes is likely to have had a sharp negative impact on these companies, especially Hero MotoCorp and Bajaj Auto Ltd. Hero MotoCorp has lot more rural penetration as compared to its peers and as far as Bajaj Auto is concerned, in addition to domestic weak demand, 40% of its volume comes from exports, which are not doing well due to problems in Nigeria and other overseas markets. However, valuation of Tata Motors Ltd and Maruti Suzuki India Ltd has risen in the long run. While lot of fund investors are bullish on Tata Motors as its arm Jaguar Land Rover is doing well overseas, Maruti Suzuki India has seen very little impact of currency curbs. Stocks of Tata Motors are also seen under pressure and are likely to correct. Bajaj Auto is the only heavyweight that is seen rising next week on the Nifty Auto index. The stock of the Pune-based company is likely to move up. Amid most of the market leaders expected to remain weak next week, Nifty Auto index is also likely to trade with a bearish outlook.