Back In Favour: Experts bet on these four auto stocks to drive returns

In the last week, the BSE Auto index gained more than 4 per cent, with only one constituent among the 15 names on the index settled in the red.

Market experts believe that after a solid beatdown of the last few months, the auto sector is a good place to be in. However, the stock selection remains the key area of concern for the investors.

Vaibhav Agrawal, Founder, Teji Mandi, said that there is no serious visibility on the production of semiconductors issue that will effectively improve the situation because of the demand backlog. “The only worry right now is the availability of cars.”

“Once the availability is back to normal, which I believe should be in the coming quarters, it will be taken positively by the Street,” he added.

The upcoming monsoon season will also guide the auto sector, signalling the revival of rural demand. The IMD expects monsoons to be good and to reach Kerala earlier than usual this year, which is again positive news for the sector.

Nilesh Jain, Analyst – Technical and Derivatives Research, Centrum Broking, said that the Nifty Auto index surpassed its 200-day exponential moving average, which shows inherent strength in the index.

“From stock-specific,

came out with a strong set of numbers this week and also gave a technical breakout from its six-month falling trend line,” he added with a target of Rs 148 and a stop loss of Rs 124.

Jain is also bullish on the two-wheeler major Hero Motocorp, which also reclaimed its 200-DEMA. He expects the stock to hit Rs 2,800 with support at Rs 2,470.

In the last week, Balkrishna Industries rallied 12 per cent, whereas

zoomed 11 per cent.

Bosch and

gained 8 per cent each, while Maruti Suzuki surged 7 per cent in the last week.

Arun Malhotra, Founding Partner & Portfolio Manager, CapGrow Capital Advisors, said that auto stocks have headwinds in the form of higher oil prices, disruption in chip supplies, and increasing interest rates.

“Two-wheeler stocks are attractive while CV players have shown significant improvement in numbers,” he added. “Stocks like Tata Motors have already roped in a P/E for EV opportunities and maybe looked serious.”

Both

and Ashok Leyland’s quarterly numbers were quite strong. EV opportunities could be big a few years down the line, and one of these, if not all, will be a major beneficiary, said Malhotra.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)