Auto Stocks Outlook for the week – 26 to 30.09.2016

Auto Stocks Outlook for the week – 26 to 30.09.2016

 Seen range bound; bias remains positive overall 


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 Seen range bound; bias remains positive overall   Stocks  of  major  automobile  companies  are  seen  trading  in a  narrow range  next  week,  with  some possibility of a correction, as most of the stocks have  performed well  and  are in the "overbought" category.  However,  bias  for  the  consumer  discretionary  sector  remains  positive.  Payout  of  arrears after  the  salary  hike  of  government  employees  and  good  monsoon  rains  are  seen  lifting  demand during Sep-Oct. Earlier this month, the Society of Indian Automobiles Manufactures revised upward its projection for growth in sales of passenger vehicles in 2016-17 (Apr-Mar) to double digit, from 7-8% seen at the beginning of the year. The CNX Auto index, which ended higher by 1.06% on week at 10224.95 points yesterday, is seen trading sideways in line with broader indices over the next few sessions.   Stocks of Maruti Suzuki India Ltd has been trading in the "overbought" zone in the last few weeks and analysts see some correction in the stock going forward. For the longer term, however, the stock remains positive, backed by strong fundamentals and a good order book. Analysts are also bullish on Tata Motors Ltd in the long term but expect some pullback in the stock. Two-wheeler companies are seen consolidating at current levels with stocks like Bajaj Auto Ltd, Hero Motocorp Ltd entering into overbought zone. Analysts expect some pullback in Hero Motocorp Ltd. Shares of Bajaj Auto Ltd and Mahindra & Mahindra Ltd are seen trading in a narrow range next week.


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