Why stock market investors should look at auto shares ahead of India’s GDP data release?

GDP of India: As Gross Domestic Product (GDP) of India for January to March 2023 quarter is going to become public today, stock market experts have suggested positional investors to look at auto segment stocks as auto stocks perform better when national economy is in sound health. They said that both macro and micro segment of the Indian economy is showing signs of recovery after Covid-19 beating and hence both two wheeler and four wheeler companies are expected to report strong quarterly numbers in medium to long term.

Why you should buy auto stocks?

Speaking on why one should buy auto stocks ahead of India's Q4 GDP data release, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “On account of strong agriculture prospects and improved domestic consumption, market is expecting that Indian GDP may grow to the tune of 5.5 per cent during Q4FY23. This signals strong recovery in Indian economy after Covid-19 beating. As auto sector has direct connect with public spending and the spending is expected to shoot up during sound economic conditions as higher income leads to higher spending in realty and auto segment.”

Gorakshkar said that in the wake of higher income, people prefer to more lavishing life style and first thing, which they try to do is to have a vehicle. If they already have a vehicle then they try to upgrade from two wheeler to four wheeler and from low end four wheeler to high end four wheeler.

Expecting better returns from both two wheeler and four wheeler company stocks, Vaibhav Kaushik, Research Analyst at GCL Broking said, “Indian economy has been signaling strong recovery at both micro and macro levels. this is expected to emerge in January to March 2023 GDP of India. Hence, income of all sections is expected to grow and hence both two wheeler and four wheeler companies are expected to report strong quarterly numbers in medium to long term.”

Stocks to buy today

On stocks to buy today ahead of India's GDP data release, Vaibhav Kaushik of GCL Broking said that one should buy Maruti Suzuki India Limited and Hero Motocorp shares.

On stocks to buy from auto segment, Prabhudas Lilladher has recommended positional investors to buy shares of Ashik Leyland, Bharat Forge, Eicher Motors, Endurance Technologies, Mahindra & Mahindra, Tata Motors and TVS Motor Company.

What's expected from GDP of India today

Driven by factors like strong agriculture prospects and improved domestic consumption, India's GDP is expected to have grown 5.5 per cent during the January-March 2023 quarter, against the growth of 4.4 per cent during the preceding quarter.

According to the Reserve Bank of India (RBI) Q4 estimates, India's real GDP growth will stand at 5.1 per cent in the previous quarter. For 2023-24, GDP growth will stand at 6.5 per cent.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.