Automobile stocks lead post-budget rally
The consumers have already returned but post budget the investor confidence in the automobile sector is back with a bang.autos Updated: Jul 17, 2009 21:13 IST
The consumers have already returned but post budget the investor confidence in the automobile sector is back with a bang. Even as the markets remained largely volatile, the auto index grew the fastest since budget and is the only index to grow in double digit.
The roll out of the first Tata Nano on Friday drove the index to its crescendo with it emerging as the best perfoming index in a day for the first time in over two years. The index jumped by 5.2 per cent edging out banking index which grew by 4.8 per cent on Friday.
All the big stocks in the sector witnessed handsome gains. Though Mahindra and Mahindra led the charge, Nano propelled Tata Motors to a gain of 6.7 per cent, one of its best in recent times as also Exide, which is one of the suppliers to it.
“The rally is a culmination of the revival in demand that we have been witnessing in the last quarter or so on the back of improved financing by banks especially for cars,” said Surjit Arora, auto analyst at Prabhudas Lilladhar Securities. “Auto is the biggest domestic consumption story and so even though the valuations look little stretched the growth is there.”
Car sales have grown by 4.75 per cent between April and June this year, as against a 1.3 per cent grotwh in 2008-09, but the rebound has been led by two wheelers which grew by 14.48 per cent during the period.
“Bajaj Auto which was the hardest hit by the slowdown last year posted impressive results yesterday and that has raised hopes that other companies like Hero Honda, Maruti and TVS would do much better," said an industry insider.