D-Street Buzz: Nifty Auto surges 10% since Feb 1; MM; Ashok Leyland, Bajaj Auto hit new 52-week high


After rallying for three consecutive days, the Indian stock market witnessed some profit booking. At 11:20 hours, Sensex was down 113.34 points or 0.23 percent at 50142.41, and the Nifty shed 12.20 points or 0.08 percent at 14777.80.

The auto index added over a percent intraday on February 4 surging over 10 percent since Budget day after Finance Minister Nirmala Sitharaman in her Union Budget 2021 speech proposed voluntary scrappage policy to replace personal vehicles older than 20 years and commercial vehicles older than 15 years.

The move is expected to be positive for the auto sector as it would support vehicle sales, especially commercial vehicles in the long-run.

Kenichi Ayukawa, President, Society of Indian Automobile Manufacturers (SIAM), said, “The vehicle scrappage scheme has a good intent and the auto industry will be keen to work with the government on suggestions for maximising benefits to environment and society”.

The upmove was held up by gains from Mahindra & Mahindra which jumped over 5 percent and was the top index gainer. The company reported a 4 percent YoY rise in overall sales at 20,634 units in January. Its utility vehicle sales increased 5 percent over the year earlier to 20,498 units. Exports were up 30 percent to 2,286 units. The company’s tractor sales in January jumped 50 percent YoY to 23,116 units.


The other other gainers included Balkrishna Industries, Ashok Leyland, MRF, Maruti Suzuki and Tata Motors.

Share price of Escorts gained over 2 percent after Credit Suisse has retained outperform call on the stock with target at Rs 1,720 per share. It sees a healthy outlook for tractor volumes and a stronger agricultural margin. The brokarage firm has lifted FY22/23 EPS estimates by 10 percent, factoring in Q3 beat and raising margin, according to a CNBC-TV18 report.

In terms of volumes on NSE, Tata Motors was trading with 6,13,68,183 shares followed by Apollo Tyres (5,55,35,739). The auto stocks that hit new 52-week high on NSE included Mahindra & Mahindra, Balkrishna Industries, Ceat, Ashok Leyland, Bajaj Auto and TVS Motor Company.

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in is of the veiw that long-term investors should continue to remain invested in Tata Motors for a bare minimum target of Rs 390 and beyond that much higher levels can’t be ruled out.

“However, fresh buying opportunity shall arise on dips into the zone of Rs 300 – 290 levels. Short term traders shall either book out as the rally, in the last two sessions, from the lows of Rs 255 – 312 seems to have overdone or hold with a stop below Rs 290 on a closing basis,” he added.

Brokerage firm Motilal Oswal has upgraded FY22E consol EBITDA by 7 percent (EPS upgrade of 36 percent), factoring in cost-cutting in JLR, volume upgrades in India PV and CV, and volume cuts in JLR. It has maintained Buy, with target of Rs 350 per share.

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