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Analysts cautious on auto stocks amid uneven recovery

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In December 2021, dispatches to auto dealers remained a mixed bag. While the wholesale volumes for the passenger vehicle, two wheeler and tractor segments declined on a yearly basis, the commercial vehicle segment continued to fine-tune its clock gradually. As per the latest monthly sales data, Maruti Suzuki’s overall volumes declined by 4% last month, led by a 13% decline in domestic passenger vehicle volumes. M&M’s domestic PV volumes grew by 10% year-on-year while Tata Motors’ domestic volumes grew 51%. Among the unlisted players, Hyundai Motors reported a 32% annual decline in domestic volumes; MG Motors posted a decline of 36%, while Kia Motors posted a volume decline of 34%. Renault-Nissan and Honda also reported 8-17% YoY decline in volumes. With respect to two-wheelers, Hero Moto’s overall volumes declined by 12% y-o-y; TVS Motors total sales down nearly 8%; And Bajaj Auto’s overall two-wheeler sales declined by 6%.

However, Royal Enfield’s overall volumes grew by 7%. In the stock markets, shares of auto and auto-subsidiaries entered the bullish lane yesterday, with individual stocks rising up to 8% intra-day. So should you include these stocks in your portfolio? On the downside, suggest analysts. The sector, especially the two-wheeler makers, is not completely out of the woods yet. Ashwin Patil, Senior Research Analyst, LKP Securities, cautioned that apart from persistent price hikes and rising fuel costs, a possible third wave due to the Omicron variant could limit consumer spending. As per Tech Charts, Nifty Auto Index may rise around 4% from current levels, while select individual stocks may see gains of up to 9%. Clearly, fundamental and technical parameters show limited upside for auto stocks as shortage of semiconductor chips, hike in prices, expensive entry-level two-wheelers and tech charts cloud are firm resistance zones on short-term sentiment. Now, coming to Tuesday’s trading set-up, stock-specific Flows, global economic data points and FII activity will guide the market trajectory. yesterday, BSE Sensex The index rose over 1,000 points during the first trading session of CY2022. It finally closed up 929 points at 59,183. nifty 50On the other hand, it closed 272 points higher at 17,626 level amid broad buying.

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Hassaan Minhas

Hassaan is a journalist at and he deals with Latest News, India News, and Tech News. Hassaan is a very professional and authentic news journalist.

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