Investors turn bullish on the sector on higher sales

Though the high interest rates still prove to be worrisome, the auto sector seems to be riding it out with the positive mood rubbing on select auto stocks as well.

What gave a further boost to the investor enthusiasm in the auto counters was the robust October numbers.

With Rajiv Bajaj, MD, Bajaj Auto Ltd (BAL), announcing on Friday that the October sales were “the second best month ever in our history,” the stock hit its lifetime high of Rs 1.906 on the NSE before closing at Rs 1,896.85. .

M&M was the other star performer recording its all-time high at Rs 921.

Maruti Suzuki shares also recorded a new 52-week high but as the stock had rallied much in recent weeks, it was relatively muted today.

Record sales

Rajiv Bajaj, in a TV interview on Friday, said: “We were looking for some positive signs from the domestic market and we saw them in the last month,” despite concerns over high interest rates. The total sales that included exports, of two and three wheelers, of BAL was 4.11 lakh units in OctoberBajaj Hero MotoCorp was another stock to sizzle, gaining Rs 33.95 to close at Rs 1,943.95. The investor sentiment in this stock too was fuelled by its last month sales of close to 5.30 lakh units.

Eicher Motors was also in the limelight gaining Rs 39.20 to close at Rs 2,390, marginally lower than its 52-week high of Rs 2,405 that it touched on October 25.

The three auto stocks that did not contribute much to rally were Maruti, TVS Motor and Tata Motors. Maruti’ shares which have already rallied in recent weeks touched a new 52-week high of Rs 1,477.35 but closed a little lower at Rs 1,464.55, a gain of just Rs 4.80. TVS Motor shares closed unchanged at Rs 38.75 and Tata Motors, which saw its October car sales decline compared to Oct 2011, edged up marginally by Rs 2.90 to Rs 270.35.

Research house IDBI Capital expects dispatches to remain healthy in November as well on account of festive season but feel weak volume trend may return later for the sector barring UVs and SCVs.

(This article was published on November 2, 2012)
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