Auto Stocks Outlook for the week: 07 - 11.01.2013

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India's Industrial production for November, due Jan 11, and earnings for Oct-Dec will provide cues to the broad market in the short term, which will lend direction to automobile stocks. The BSE Auto Index is expected to see mild consolidation in the coming week. Going ahead, we expect the demand scenario to remain challenging in 4Q FY 2013 as slowdown in economic growth coupled with higher interest rates and fuel expenses continue to dampen consumer sentiments. Positive on Ashok Leyland Ltd, Hero Moto Corp Ltd, Mahindra & Mahindra Ltd and Tata Motors Ltd on strong fundamentals of the companies. Karvy Stock Broking Ltd expects Hero MotoCorp volumes to remain subdued over the next two-three months on account of high level of inventory as well as lower offtake in festival season. Hero MotoCorp reported volumes of 541,615 units in December, flat year-on-year.

Auto Stocks Outlook for the week: 31.12.2012 - 04.01.2013

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Sale figures for December, to be announced early next week, are expected to lend direction to stocks of automobile companies in the coming week. Auto companies announce their monthly sales numbers on the first of every month. In the coming month, only discount and additional benefit might change the current sentiment otherwise there is some possibility of (downward) correction in auto sales. The BSE auto index is likely to face resistance at 11510 points and find support at 11200 points in the coming week. The auto stocks will also track the broad market, which is expected to take cues from overseas markets next week.

Stocks of Mahindra & Mahindra and Maruti Suzuki India are seen positive going forward. We continue to remain bullish on the M&M's key performing segments that is, utility vehicles, pickups, Maxximo and GIO. The company has ramped up the production of XUV500 by around 1,000 units and around 1,500 units ramp up in volumes of Quanto; we expect company's volume to grow by over 10% in FY13E (2012-13).

Auto Stocks Outlook for the week: 24-28.12.2012

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Stocks of frontline automobile companies are seen tracking the broad market next week, which is likely to be volatile with a negative bias.The derivative series for December will expire on Thursday and trade is expected to be volatile on account of traders rolling over positions to the January derivatives contracts. Auto stocks may see some movement in anticipation of the sales numbers for December due on Jan 1. We continue to remain bullish on the M&M's key performing segments that is, utility vehicles, Pickups, Maxximo and GIO.

Auto Stocks Outlook for the week (17 - 21.12.2012)

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Stocks of automobile companies are seen tracking the broad market next week due to lack of share-specific triggers. Domestic indices will keenly eye the Reserve Bank of India's mid-quarter monetary policy review on Tuesday for cues. The central bank is unanimously expected to leave the repo rate unchanged as inflation continues to remain a concern. Around half of the poll respondents expect the RBI to cut Cash Reserve Ratio by 25 basis points to support systemic liquidity. However, chairman of the Prime Minister's Economic Advisory Council C. Rangarajan yesterday said he expected the RBI to cut interest rates at the third quarter policy review in January if inflation continues to soften.

India's headline inflation rate based on the Wholesale Price Index fell to a 10-month low of 7.24% in November against 7.45% in October. Finance Minister P. Chidambaram also said in the Lok Sabha yesterday that he expects inflation to trend downwards in the next 2-3 months. The ongoing winter session of Parliament will also be watched by the market for cues. Tata Motors and Mahindra & Mahindra look positive going ahead. Tata Motors on Wednesday announced that retail sales numbers for Jaguar Land Rover in November had risen 14% on-year to 29,893 units. Bajaj Auto and Hero MotoCorp stocks look weak going forward mainly because there was a slowdown in two-wheeler sales.

Auto Stocks Outlook for the week (10-14.12.2012)

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Stocks of automobile companies are seen positive next week after the Reserve Bank of India on Thursday hinted that the central bank could cut key rates at its next review of the monetary policy on Dec 18. Subbarao, while speaking to reporters from Press Trust of India at an event in Kolkata, hinted at the central bank cutting rates with an aim to revitalise the slowing economic growth of the country. In anticipation of a rate cut, automobile stocks could see a short-term uptrend. The Society of Indian Society Manufacturers will on Monday detail automobile sales for November.

Auto Stocks Outlook for the week (03-07.12.2012)

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 Stocks of automobile companies are seen taking cues next week from monthly auto sales numbers for November. The auto index is expected to trade in a range with positive bias, according to market participants. The sales numbers for auto companies, due on Saturday, are expected to be firm on account of festive sales during the month.

The month of November 2012 would have the benefit of a low base of the last year as the volumes had dropped after increased sales in the festive season. Last year, festive sales were mostly seen in the month of October. We expect Maruti Suzuki and Mahindra & Mahindra to outperform.

The ongoing winter session of Parliament will also be a key monitorable for the Street. Investors will eye developments in Parliament over the vote on foreign direct investment issue. The Lok Sabha will discuss the issue on Tuesday and Wednesday, and the Rajya Sabha after that.

Auto Stocks Outlook for the week (26-30.11.2012)

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Stocks of automobile companies are seen tracking the broad market next week, according to market participants. Some movement is likely in automobile stocks on Thursday and Friday as expectations of monthly sales numbers will start pouring in. The ongoing winter session of the parliament will also be a key monitorable for the Street.

Important economic agendas for the session include amendment to the Insurance Bill to raise foreign direct investment cap to 49%, Banking Regulation
Amendment Bill and Direct Taxes Code. The parliament proceedings were stalled on Thursday and Friday following the Opposition's uproar over government's decision to allow foreign direct investment in multi-brand retail. Prime Minister Manmohan Singh has called for an all-party meeting on Monday to reach a consensus on the FDI issue.
With the results season behind us, focus over the next three-four weeks will shift to the reforms and also the fiscal cliff issue in US. If some of the proposed bills are taken up and passed, we can see the sentiment turn bullish and markets trending higher over the next few weeks. The market will also take cues from European Union summit on hope that officials will reach a deal to release the next tranche of bailout funds to debt-ridden Greece.

We continue to remain bullish on Ashok Leyland and expect over 20% volume growth in Nov'12, backed by incremental volume from new LCV.

Auto Stocks Outlook for the week (19-23.11.2012)

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Frontline automobile stocks would continue to trade weak next week on negative sentiments that are largely driven by high interest rates. Weak global trends on Eurozone debt worries and the rupee trading above 55-levels against the dollar will also hit sentiments that would determine the course of the broader markets next week. Reserve Bank of India Governor D. Subbarao's comments that inflation at 7.45% "is certainly quite high" would also play on the investors' minds as hopes of a likely rate cut dim. After headline inflation fell to a 9-month low of 7.45% in October, investors had hoped for a rate cut in December when the central bank reviews the monetary policy.

Automobile companies' shares are sensitive to interest rates as higher rates usually discourage people to take loans to buy vehicles. Important economic agendas for the session include amendment to the insurance bill to raise foreign direct investment cap to 49%, banking regulation amendment bill and Direct Taxes Code.

Auto Stocks Outlook for the week (12-16.11.2012)

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Stocks of major automobile companies are likely to see an uptrend next week following a pick-up in festive sales, with Diwali on Nov 13. The passenger vehicles segment looks positive.

India's largest carmaker Maruti Suzuki India Ltd, which posted a better-than-expected quarterly result, would continue to be on a bull run. The company's new Alto 800, receiving a high number of bookings, looks to dominate the low-range hatchback segment in the festive season, giving Maruti Suzuki's numbers a push.

Mahindra & Mahindra, too, looks good for the coming week, on robust sales of its XUV 500 and the newly-launched Quanto. Tata Motors Ltd, which posted a lower-than-expected 10.5% on year growth for Jul-Sep, is still likely to post gains, primarily on its announcement about launch of six new variants in the next few months.

Among the commercial vehicle manufacturers, Eicher Motors looks slightly negative. Hero Motocorp, which posted a dismal quarterly performance with a 27% on year profit drop, is surprisingly riding high, mainly on festive sales. The scrip is seen gaining rising in the coming week.

Auto Stocks Outlook for the week (05-09.11.2012)

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Stocks of major automobile companies are likely to continue their positive run next week as well as festive sales are expected to bring cheer to the stocks. Domestic automobile manufacturers on Thursday had reported strong October sales as new launches and festive season sales showed renewed positive sentiment in to the market, catalysing the stocks of Indian automobile manufacturers. While Maruti Suzuki is likely to see a flat trade, Tata Motors is likely to be positive. The investors will also take cues from Jul-Sep earnings and management commentary. Tata Motors will detail its Jul-Sep earnings on Wednesday, followed by Ashok Leyland on Thursday.

Auto Stocks Outlook for the week (29.10.2012 - 02.11.2012)

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Stocks of frontline automobile companies are likely to trade sideways-to-positive next week, with all eyes on the Reserve Bank of India's monetary policy review and October auto sales numbers. The market will also take cues from Jul-Sep earnings and management commentary. Maruti Suzuki India Ltd will detail its earnings for the September quarter on Oct 30.

The Reserve Bank of India will announce its second quarter review of Monetary Policy for 2012-13 (Apr-Mar) on Oct 30, and any cut in key policy rates will act as a trigger for the interest-rate-sensitive auto stocks. Cash Reserve Ratio is the minimum amount of cash that banks are mandated to deposit with the central bank at all times. Repo rate is the rate at which the central bank lends to other banks under its Liquidity Adjustment Facility.

Auto Stocks Outlook for the week (15-19.10.2012)

Stocks of automobile companies are likely to show a mixed trend in the coming week. Maruti Suzuki India Ltd is likely to be the pick of the sector as the stock is seen doing well in the near-term on the back of a likely recovery in production and new product launch. The festive season will kick off a string of launches. Maruti will launch its much-awaited new Alto-800 on Tuesday. The company is also ramping up production at its Manesar plant, which makes the counter attractive. Mahindra & Mahindra will launch its high-end sports utility vehicle SsangYong Rexton on Wednesday. The company's stock may trade in the positive territory for a few sessions but is largely seen in a range. Tata Motors' Jaguar Land Rover monthly sales numbers, expected on Oct 15, will set the trend for the stock. The volumes are seen lower year-on-year, and thus will be slightly negative for the counter. We see a downward correction in the stock price of two-wheeler makers in the near term. Stocks of Hero MotoCorp are seen weak while those of Bajaj Auto are expected to trade in a range.

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Auto Stocks Outlook for the week (24-28.09.2012)

Stocks of automobile companies are seen flat to mixed in the coming week with a positive bias for Tata Motors and Maruti Suzuki India. The auto stocks will also see some action due to build-up expectations for September volume numbers due on Oct 1.

Both Maruti and Tata Motors are likely to post strong volume growth, along with better margins starting H2 FY13 (second half of 2012-13) itself, and remain our top picks in the four wheeler space, followed by Hero Motocorp on reasonable valuations and dominant position in two wheelers. Maruti Suzuki stock was seen finding support at 1,250 rupees with major resistance seen at 1,350 rupees. Shares of Tata Motors will face resistance at 290 rupees with support at 260 rupees in the coming week

We expect positive on Mahindra & Mahindra as late revival of the monsoon is likely to aid spring season crop that will push tractor sales.Also, the forthcoming festive season is  expected to push demand.

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Auto Stocks Outlook for the week: 17.09.2012 - 21.09.2012

The Reserve Bank Of India's mid-quarter monetary policy review on Monday will lend direction to the stock market next week and to interest rate-sensitive auto shares next week. Even though Thursday's hike in diesel price could add to inflationary pressures, market participants believe the Reserve Bank of India will now have room to lower interest rates.

India's central bank has been stressing for some time now that an improvement in India's fiscal consolidation position is key for a rate move. On Thursday, oil-marketing companies raised the price of diesel by 5 rupees per ltr. While kerosene and petrol prices were left untouched, excise duty on petrol was cut by 5.5 rupees a ltr.

Sales numbers of Tata Motors' Jaguar and Land Rover are likely to come over the weekend that would be the key driver for the stock next week.

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Auto Stocks Outlook: 10-14.09.2012

Stocks of automobile companies are seen to be range-bound in the week ahead. Last saturday, the BSE Auto Index ended at 9492.19 points, up almost 2%. Oil Minister S. Jaipal Reddy ruling out any immediate hike in fuel prices is also likely to lift sentiments. Investors will also take cues from India's industrial production growth data for July scheduled for Wednesday. In June, India's industrial production contracted 1.8%. We are positive on Tata Motors and Maruti Suzuki. Maruti Suzuki has started ramping up production at its Manesar plant, which is a positive.  The Society of Indian Automobile Manufacturers will also detail auto sales numbers for August on Monday. Any news of likely a cut in production from the SIAM data may have a bearing on auto stocks' movement. As it is, the two-wheeler industry is facing high inventory build-up. Hero MotoCorp has reportedly lowered production by 15-18% in September to avoid an inventory pile-up. Hero MotoCorp stock is seen under-pressure in the short term. Softening of commodity prices globally is expected to aid margins across the board.

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Auto Stocks Outlook for the week (03.09.2012-07.09.2012)

Auto stocks next week are likely to take cue from the August wholesale data that automobile manufacturers would detail over the weekend. With the Apr-Jun gross domestic product growth already at a decade low, market watchers say there shouldn't be much to look forward to as far as auto despatch numbers are concerned.
According to government data released today, the country's gross domestic product grew 5.5% in Apr-Jun, compared to 8% in the corresponding quarter of last year. While it is known that August passenger car sales would be on the lower side, it would be interesting to see how the two-wheelers, which have till now withstood economic slowdown, have fared in the month.
The domestic automobile market is slipping into a slowdown and unless the new Finance Minister, P Chidambaram, decides to offer a stimulus package, the slowdown is only expected to get deeper. Loan rates (rates at which new vehicles are financed) remain high in the 12-15% range, petrol prices have not softened in any significant way and the difference between petrol and diesel prices remains as wide as ever.
According to the Society of Indian Automobile Manufacturers, two-wheeler sales grew the slowest in July, since October last year. Stocks of two-wheeler companies have already fallen 4-9% in the past few sessions on concerns that August sales figures are likely to be disappointing. News of likely production cuts and inventory build-ups at dealer levels are also going to be keenly watched by investors.
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Auto Stocks Outlook for the week (27-31.08.2012)

Stocks of automobile companies are seen tracking the broad market next week. Tuesday's annual general meeting of the country's largest carmaker Maruti Suzuki India Ltd will be eyed for any major announcements. Auto stocks are seen tracking the broad market in the coming week on lack of any stock-specific triggers. Some activity is likely in the last few trading sessions, as build-up is expected on monthly sales numbers due over the next weekend. Automakers will detail their monthly sales over the next weekend, and the numbers are eyed by the market for cues.

The market is also awaiting takeaways from the worker unrest-hit Maruti Suzuki's annual general meeting. Any major announcement by the management, especially regarding its proposed plant in Gujarat, will act as a trigger for the stock.

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Auto Stocks Outlook for the week (21-24.08.2012)

Stocks of automobile companies are expected to follow the broad market in the coming week with a positive bias. A late pick up and better geographical distribution in monsoon rains are seen aiding the stock as it is likely to boost tractor sales.

Monsoon rains that were around 19% below normal in July have improved this month narrowing the season deficit to 16% as of today. We are also upbeat on Maruti Suzuki India Ltd and that the company is expected to start ramping up its production to earlier levels within three to four weeks. On Thursday, the company said it would restart partial production at its trouble-prone Manesar factory in Haryana on Aug 21.

Tata Motors shares are expected to be in the positive territory in the next 10-15 days. The company reported a 21% jump in July global sales aided by subsidiary Jaguar Land Rover's continued strong performance.

Bajaj Auto and Hero MotoCorp shares are seen moving in a narrow range next week.

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Auto Stocks Outlook for the week (13-17.08.2012)

Stocks of automobile companies are seen tracking the broad market in the absence of any major triggers in the week starting Monday. Market participants will take cues from the July headline inflation based on Wholesale price index due for release Tuesday. The National Stock Exchange's 50-stock Nifty is seen finding support at 5250 points, while resistance is seen at 5380 points.

The automobile stocks are expected to remain on the softer side in the short term considering there is a lack of any positive stock-specific or macroeconomic triggers. Demand is likely to pick up post festive season, which starts from October. However, only improved domestic macro factors will ensure whether the demand sustains or not.

Stocks of Hero MotoCorp are seen facing resistance at 2,150 rupees and seen support at 1,790 rupees. Maruti Suzuki stocks will find support at 1075 rupees and resistance at 1,230 rupees. The scrip will also track any news flow regarding developments around the company's Manesar plant, which has been shut following labour unrest late last month. However, positive on Mahindra & Mahindra and pegged resistance for the stock at 770 rupees with support at 700 rupees. If the stock crosses its first resistance level, it could easily touch 820 rupees, Tata Motors stocks are seen finding support at 215 rupees and resistance at 252 rupees.

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Auto Stocks Outlook for the week (06 -10.08.2012)

Stocks of automobile companies are seen flat in the coming week as sales numbers indicate softness in demand due to economic slowdown that may be accentuated following a weak monsoon. We believe volume growth is likely to slow down further due to weak monsoons, high inflation and weak consumer sentiment. The southwest monsoon this year is likely to be around 85% of the long period average, making it the worst rainfall since 2009, India Meteorological Department Director General L.S. Rathore said yesterday. The market will also eye Apr-June earnings and management's outlook for stock-specific cues. Mahindra & Mahindra and Tata Motors will announce their Apr-Jun earnings on Aug 8 and Aug 9, respectively.
Tata Motors is seen reporting a 35% on year growth in net profit. Mahindra & Mahindra is likely to post a 1% growth in profit for the June quarter. Both Mahindra & Mahindra and Tata Motors are seen rangebound with a negative bias in the short term. Maruti Suzuki stocks are seen finding support at 1,074 rupees while resistance is pegged at 1,144 rupees. The market is awaiting clarity on when operations at the company's Manesar plant are going to be resumed. Yesterday, the company said that it has still not decided on resuming work at the plant. Tata Motors' stocks are seen finding support at 203 rupees with resistance at 230 rupees. The trend for the stock is seen to be negative.