Auto has enough horsepower to race on high-way and overtake
stocks made fresh highs on Monday in anticipation of strong March quarter results from them. Traders created fresh bullish bets on auto stock futures as the recent outperformance is expected to continue through the current valuations may be reflecting most of the optimism around the share prices.
Maruti Suzuki, Mahindra & Mahindra and Eicher Motor gained around 3% each, hitting new highs during the trading session. Battery maker Exide soared 16.8% to new record levels. TVS Motor rose 3.2%.
«The upmove in most auto stocks is a reaction to the previews of auto players which indicate a good set of results for Q4,» said Aditya Welekar, senior research analyst at Axis Securities. «A significant inflation in commodity prices is also not expected in the upcoming quarters.»
The Nifty Auto index rose 2.16% to record levels on Monday, compared to a 0.68% up-move in benchmark Nifty, which also closed at an all-time high. Out of the 16 stocks in the Nifty Auto Index, 15 advanced and 1 declined.
«When the broader market was in a corrective phase recently, the auto sector didn't see a price correction and this relative strength of the sector is driving further buying interest,» said Ruchit Jain, lead research analyst at 5paisa. «The broader trend in the sector has also been positive in the last few months.»
In the past month, the auto index has advanced 5.07% while Nifty gained 1.49% in the same period. It has gained 20% in the past three months as against 5.3% gains in the Nifty.
«A strong build-up of long formation in
