Auto stocks are expected to hover around the current levels next week as no new triggers are expected before the festive season which starts October, analysts said. "The auto counters have already appreciated and there is not much scope of any further upswing before the festive season," Alpa Shah, analyst with Mumbai-based Khandwala Securities said.
The rate sensitive auto stocks had surged on expectations that auto sales would gain momentum as lending rates in India are expected to fall tracking this week's interest rate cut by the U.S. Federal Reserve. The Federal Reserve cut the benchmark federal funds interest rate by a larger than expected 50 basis points to 4.75% earlier this week. The BSE's auto index surged 6.30% during the week.
"Auto counters are already trading at higher levels and I do not see much upside for this sector from its current levels," Shah said. However, analysts say there might be some buying in a few frontline auto counters next week as the companies are scheduled to detail their September sales numbers the week after, which are expected to be better. Automobile companies detail their monthly sales numbers on the first week of every month.
"The sales are expected to be better for all automobile companies in September, so we might see some build up in the counters," an analyst with a domestic brokerage said. Domestic car sales during August gained 18% from a year earlier to 98,893 vehicles as new models and discounts helped lure buyers in a market battling high interest rates and fierce competition.
However, motorcycle sales fell 11%, while sales of trucks and buses rose 3.2%, according to the Society of Indian Automobile Manufacturers. After a slowdown during the first five months of the current financial year (2007-08), auto sales are expected to pick up in the coming festive season, which starts October. Automobile companies would witness better sales in coming months during the festivals of Dussera, Diwali, Eid and Christmas, analysts said. The launch of various new models may also attract more buyers.
The country's third largest two-wheeler company TVS Motors alone would launch seven new products in October, while Bajaj Auto managing director Rajiv Bajaj has said he expects to sell 20,000 units of the recently launched 125cc motorcycle in September. That figure could boost Bajaj Auto's shares. "We might see Bajaj Auto stock touching 2,650-2,700 rupees on expectations from the new launch (125cc XCD)," Shah said.
Following are this week's prices, in rupees, of key automobile shares, compared with the previous week on the National Stock Exchange:
| Company | Sep 21 | Sep 14 | Change (%) |
| Ashok Leyland | 38.9 | 36.9 | 5.42 |
| Bajaj Auto | 2,499.50 | 2,381.40 | 4.95 |
| Hero Honda | 738 | 667.7 | 10.52 |
| Mahindra & Mahindra | 774.3 | 698.5 | 10.85 |
| Maruti Udyog | 931.4 | 866.75 | 7.45 |
| Tata Motors | 741 | 693.75 | 6.81 |
| BSE Auto Index | 5193.5 | 4885.47 | 6.3 |
| Nifty | 4837.55 | 4518 | 7.07 |
| Sensex | 16564.23 | 15603.8 | 6.15 |
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