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Deeptha Rajkumar

EXPECTATIONS of impressive quarterly numbers and sustained improvement in vehicles sales, revved up interest in auto stocks today, with many of the counters hitting new highs intra-day.

Tata Motors, Bajaj Auto, Hero Honda, and TVS Motors witnessed sustained buying interest on the bourses.

Tractors scrips such as Eicher Motors, Escorts, Punjab Tractors and M&M also rallied on the back of reports that tractor inventories have come down significantly.

According to Mr Prashant Nair, vice-president equities, P-Sec, the interest in auto sector is purely driven by fundamentals.

"There is good phased growth happening and there is expectation of a positive trend in quarterly numbers,'' he said. Reiterating this Mr Srikanth Shetty of Karvy Stock Broking who is of the opinion that today's interest in the auto stocks was an interplay of factors. "It is a play on the growth in the economy plus a pre-result rally,'' he said. Additionally, scrips like Eicher Motors also gained momentum on reports of the company looking to restructure its business. Similarly, TVS Motors received a shot in the arm following a company announcement that it is considering a stock split for the purpose of improving liquidity in the market. Hero Honda moved today on talk of a 21 per cent growth in vehicle sales Y-o-Y, in October.

While bullish on the sector as a whole, analysts, however, expressed concern at the sharp surge in many of the auto stocks today. "At these levels valuations of many stocks seem overstretched. It is a little disconcerting. The market seems to be taking too much of a futuristic view,'' an analyst said.

Yet according to Mr Nair the current valuations seem to factor in most of the growth happening.''At the same time the scope for disappointment is very low,'' he said.

Tata Motors hit a 52-week high of Rs 347 only to end the day at Rs 342.45 up 7.50 per cent on the BSE with around 17.53. On the NSE the stock closed at Rs 341, up 7.11 per cent with around 53.28 lakh shares traded.

Among other counters that hit new highs intra-day on the BSE were Punjab Tractors at Rs 233, M&M at Rs 275, TVS Motors at Rs 900, Escorts at Rs 60.35 etc. Of these Escorts ended the day locked at the upper circuit at Rs 60.35.

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