Auto Stocks Outlook for the week (18-22.06.2012)

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Jun 18, 2012, 5:35:45 AM6/18/12
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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.


Global sales of Jaguar Land Rover rose 35% on year to 30,094 units. We also expect sales of Jaguar to pick up in the current year because of the new product launches lined up. Bajaj Auto is likely to launch new vehicles this year and this may support its share price.


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