Top Stocks To Buy As Auto Shares Race in Top Gear Include M&M, Tata Motors, and Others

Auto stocks to buy: On Monday, auto shares continued their recent upward trend for a third straight day. To 11,709.35, the Nifty Auto index increased by 1.09 percent. In three trading sessions, the index has increased by 7.61 percent. Mahindra & Mahindra (up 0.92%), TVS Motor Company (up 0.71%), Sona BLW Precision Forgings (up 1.13%), Ashok Leyland (up 1.18%), and Maruti Suzuki India (up 1.4%) also saw gains.

after experiencing difficulties in the previous quarters as a result of greater expenses brought on by rising commodity prices, supply chain problems, fluctuating fuel prices, and higher vehicle pricing. Given the stability in metal prices, which had caused margin concerns, auto stocks continued to rise.

"The CV sector is doing well because all of its fundamental factors are in place. Positive for both PVs and the ground, the demand appears to be high, and the order book is robust. Positively cautious regarding tractors and two-wheelers. We must observe and wait to see if they improve sequentially, according to Ashwin Patil, the Senior Research Analyst at LKP Securities.

The Nifty Auto index, which prices in predicted benefits of declining commodity prices, mainly steel and aluminum, the key materials for building automobiles, resulting in relieving cost pressure, has increased by 20% since its March lows, proving to be the highest gainer among all sectors.

The reduction in the price of raw materials like steel and aluminum will also aid the automotive industry. The margins could be improved by negotiating new steel contracts at a reduced cost. According to Naveen Kulkarni, chief investment officer at Axis Securities, the chip shortage will also start to dramatically lessen in the upcoming quarters, assisting major OEMs (original equipment manufacturers) in increasing production.

While companies have raised prices, Morgan Stanley said that cost constraints are receding. The volume outlook across segments is also positive.

Punit Patni, an equity research analyst at Swastika Investment, commented on price increases by stating: "Automobile companies had increased their prices due to rising raw material prices, and these hikes are not expected to reverse. Therefore, in case the key raw material prices cool off, these companies will witness a significant boost in their bottom line."

Nifty Auto Technical Outlook

Ashika Group's Tirthankar Das, Head of Technical Research, stated: "Over the previous two weeks, the careuprise sector has seen a sustainable uprise." The sector is currently situated on the cusp of an upside breach of cluster resistance of an up-and-down sloping trendline at roughly 10,600. Consequently, a rapid upward move from here could have a sharply beneficial influence on the industry. In a weekly time frame, positive chart patterns like higher tops and bottoms are still present. There are currently no indications of an oscillator reversal, and the weekly 14-period RSI is still in the green.

Top Stock Picks from Auto Sector

Maruti Suzuki, Ashok Leyland, Tata Motors, M&M, and Eicher Motors are overweighted by Morgan Stanley. According to a report, "We are equal-weight on Bajaj Auto and Samvardhana Motherson, but underweight on Amara Raja Batteries, TVS Motor Company, and Hero MotoCorp."

"The sector outlook is positive from a medium to the long-term viewpoint," Patni stated while recommending car companies for investment. The majority of the problems, such as high material prices, a shortage of semiconductors, and covid-led disruption, are fading, and demand is experiencing a rebound.

Maruti Suzuki

Due to an improvement in product offering and a decline in the price of essential raw materials, the company is well-positioned to operate well over the medium to long term. In addition, the business expects to perform well on the margin front in the inexpensive sector, or below Rs. 10 lakh, thanks to a decline in commodity inflation. This market is quite volume-sensitive, and the company was having trouble raising pricing without reducing volume. We anticipate that this issue will eventually go away.

TATA Motors

Since the management changed, the organization has undergone a thorough transformation. The company has increased its market share as a result of its fantastic product lineup. The company has been successful in capitalizing on the trend of customers' increasing preference for and knowledge of safety and build quality; particularly in this area, the company's new offers have been well-received. Due to its first-mover advantage and the synergistic benefits from other group companies, the corporation is also one of the largest winners of the ICE to EV transition.

Ashok Leyland

The government's infrastructure spending, rising construction activity, the effects of covid subsiding, and rising demand from the replacement side are all expected to have an impact on the CV market. This business has benefited greatly from the rise in demand for CVs. In addition, supply-side issues with the LCVs were a result of the shortage of semiconductors. LCVs are expected to resume their regular operations as soon as signs of respite become apparent.

Ashika Group's Tirthankar Das named M&M and LG Balakrishnan & Bros Ltd. as his top stock picks.


The stock has been consolidated between 980 and 1050 for more than a month. This grouping takes the shape of a "Flag" configuration. With a wide-range candle and an increase in volume, the price has now successfully broken out of the pattern. This momentum signals the start of the stock's ascent. In the medium to long term, one might buy the stock at the current price with an upside goal of 1,125.

LG Balakrishnan & Bros Ltd

After finding support at the 23.6% retracement level of the 2-year advance (High: 736; Low: 145), the price recovered, indicating that more upward momentum was developing. The daily 14-period RSI has generated a buy signal on the oscillator's front after recovering from the oversold area, reinforcing the upward bias. For a short-term upside target of 670, buy the stock at the current price.

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