Auto Sector
The Indian auto sector is showing weakness as two major
outperformers (BAJAJ-AUTO and TATAMOTORS) are turning weak while HEROMOTOCO,
TVSMOTOR and MARTUI are under stress long ago. We don’t expect gains in the
near term and advice investors to sell the rise in prices.
BAJAJ-AUTO
The long term uptrend of BAJAJ-AUTO may turn into a
downtrend if it fails to go beyond 1650 resistance. The stock, after enjoying
secular uptrend for the past for 42 months, is showing lack of velocity on the
upside. Recently both 2 weeks moving average and 12 weeks moving average are
trading below 52 weeks moving average indicating the uptrend is getting weaker.
In our view, a lot is dependant on its ability to breach
1650 resistance on the upside. If the stock fails to trend higher from here,
chances of this downward trend gathering momentum and we may see BAJAJ-AUTO
heading towards 1450 and 1200 support.
We recommend selling rise in BAJAJ-AUTO till it clears the
1650 resistance on the upside or the moving average setup indicates a
turnaround.
HEROMOTOCO
As the chart is indicating, the stock is showing
no trend. An eitherway breakout is required to guage the direction. Stay out
for now till we see an eitherway breakout. If you have the stock, put a
protective stoploss at Rs 1728 (the bottom of the range).
TVSMOTOR
The maker of scooty is showing a solid downward
trend and there is nothing special on the chart which indicates a turnaround.
Sell on rise.
MARUTI
The stock is making lower highs and lower lows for the past
34 months. We expect lower prices in the near term as the 2 weeks moving
average is trading below both 12 and 52 weeks. The major support is placed at
Rs 1050 and Rs 900 level. Major resistance zone is at Rs 1250-1400. Sell on rise
TATAMOTORS
Better chart compared to MARUTI. Recently, the stock
triggered a long term sell signal as moving average setup turned negative. We
expect losses to continue in the near term. Sell on rise till the setup
indicates a buy.
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