Sector Spotlight: Analyst recommends buy on Maruti Suzuki, Tata Motors, Mahindra & Mahindra as auto sector sees bounceback

Sector Spotlight: Indian stock markets snapped five-day losing streak to end positively on Wednesday. Benchmark indices BSE Sensex and Nifty50 settled 1 per cent up. While the Sensex closed at 57,037.50, gaining almost 574 points, the 50-share Nifty50 index closed at 17,136.55. The optimism was also reflected in various sectors and in the broader markets.

Among the sectoral indices, 10 ended in the green while the remaining five in the red. Nifty IT, Nifty FMCG and Nifty Oil & Gas were among the top performing indices. However, the Nifty Auto index walked away with the limelight. It ended at 10848.70, gaining over 2 per cent from the previous closing price.

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In the 15-share index, 13 stocks advanced while 2 declined. Sona BLW Precision Forgings, Tata Motors and Eicher Motors were top gainers and rose nearly 4.5 per cent, 3.7 per cent and 3.6 per cent respectively. Escorts was the top loser while Balkrishna Industries lost marginally.

Technical Analyst Nilesh Jain said that the sector gained as a result of a bounce-back in the overall markets. Auto sector stocks have been witnessing correction over the last 7-8 trading session, he added. In today’s session, the sector has surpassed a bearish candle which is an indicator of reversal, he further said.

Jain, who is Assistant Vice President (AVP), Equity Research Technical and Derivatives said that the Nifty Auto index will likely test levels between 11000 and 11250. If this happens, certain auto sector stocks will become favourable bets for good returns.

He recommends Maruti Suzuki India, Tata Motors and Mahindra & Mahindra with the positional term view.

Maruti Suzuki: Buy| LTP: Rs 7696| Target: Rs 8000| Stop Loss: Rs 7370| Upside 4%

Maruti Suzuki shares have witnessed a double bottom patters around Rs 7370 Jain said. The MSI shares are trading above their 200-Day-Movering Average. Investors can buy this stock at current levels and with a positional term view, he said. This stock has moved both ways over the last 5-6 trading sessions.

Tata Motors: Buy| LTP: Rs 440| Target: Rs 460| Stop Loss: Rs 420| Upside 5%

The AVP said that stock is exhibiting somewhat similar patterns of the chart. It has seen base formation which indicates a reversal. It is also trading above its 200-DMA.

Mahindra & Mahindra: Hold| LTP: Rs 880| Target: Rs 950| Stop Loss: Rs 820| Upside 8%

Jain said that M&M shares have been trading strongly and have outperformed the markets. Despite weakness in overall markets, Mahindra & Mahindra stock has not participated in the fall. The charts reflect opposite candle formation. He recommends a ‘Hold’ in the stock and buy on declines. The right levels to enter this stock is Rs 860.    

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)