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On account of rise in quarterly sales, ease in semiconductor shortage and EV theme attracting foreign investments, quality auto stocks are in top gear these days, which has led to Nifty auto index surge towards record high. Nifty Auto index today is quoting at 13,155 after making an intraday high of 13,206, around 130 points away from its 52-week high of 13,336 levels.

According to stock market experts, Nifty Auto index is looking bullish on chart pattern and it may go up to 14,000 levels in short term. They said that the index has strong support at 12,700 levels and any dip in the index should be seen as buying opportunity in quality auto stocks like Tata Motors, Maruti Suzuki India Limited, Mahindra & Mahindra (M&M), etc.

Speaking on the fundamentals that is fueling auto stocks and Nifty Auto index, Sreeram Ramdas, Vice President at Green Portfolio said, "The quarterly volume sales of market leaders - Maruti, Mahindra & Mahindra and Tata Motors have witnessed a sustainable double-digit growth despite the world economy peering into the gloom. Semiconductor shortage was an impediment to these names as they were running behind production schedules. Fast forward to today, the demand-supply scenario has capsized, semiconductor shortage has eased, and automobile names are delivering above pre-pandemic volumes."

Sreeram Ramdas of Green Portfolio went on to add that major commodity inputs used by the auto sector have fallen by 30 per cent to 40 per cent from their peaks. With easing commodity prices, margins are expected to fall back into place.

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Expecting further rise in Nifty Auto index, Sumeet Bagadia, Executive Director at Choice broking said, "Nifty auto index is looking bullish and it may hit 13,500 levels in immediate term whereas it may go up to 14,000 levels in short term. My suggestion to positional investors is to see buying opportunity if there is any big correction in the index or any heavy weight auto stocks like Tata Motors or Maruti Suzuki India Limited. These two auto shares constitute around 33 per cent of the net index strength (Maruti 19.50 per cent, Tata Motors 13.50 per cent) and they are expected to fuel the Nifty auto index in short to medium term."

"Craftsman Automation and Mahindra CIE are the component manufactures we favour in our portfolio. The EV order book build-up in both these businesses along with current valuation levels base our conviction," said Ramdas of Green Portfolio.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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