RUPEE DESK: Auto Stocks Outlook for the week (18-22.06.2012)
With the Reserve Bank of India scheduled to announce its mid-quarter review of monetary policy on Monday, the central bank's stance on policy rates will set the direction for automobile shares, as well as the broad market, next week. While a cut in rates will cheer the market, any decision otherwise may prove to be a drag on the automobile stocks as vehicle purchases in India are largely driven through loans.
Repo rate is the interest rate at which the central bank lends to other banks
under its liquidity adjustment facility. Another trigger for movement in
automobile stocks could be developments on the proposal to hike excise duty on
diesel vehicles.
Society of Indian Automobile Manufacturers today presented data on investment
and diesel cars sales to the finance ministry that will now take a call on
whether to introduce a special tax on diesel vehicles as proposed by the
petroleum ministry.
We are also positive on Tata Motors Ltd and Bajaj Auto Ltd in the short term.
Tata Motors today reported a 12% rise in global vehicle sales for May.
By RUPEE DESK |
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