We had talked about weakness in MARUTI in last post and the stock has remained an underperformer so far. This one talks about further possibility.
The stock has broken down of a bearish Head & Shoulder formation and completed pullback towards neckline also. Technically the selling can get fearsome now and a rapid fall towards Rs 1220-1250 is not ruled out and that is one major support for the stock going ahead. A sustained move past Rs 1550 would negate this view. The stock was recommended near Rs 500 on this blog in Dec-08 and it seems the time is near to take profits now.
Previous Posting on MARUTI http://tanmaygopal.blogspot.com/2009/10/maruti-blows-reverse-gear-horn-maruti.html
- Indian Car market to get more competitive after Nissan-Renault signing a deal with Bajaj Auto for an ultra low-cost car and Volkswagen looking forward to 8% market share – very positive for long term growth of the industry but more competition may give way to margin pressures for existing car makers.
- Car companies have benefited immensely after Indian government giving out stimulus package and most of the profits have been on the back of lower excise duty payment which will not be there when stimulus is stopped and that may impact demand for cars. Finance Minister Pranab Mukherjee raised concern that domestic demand is still needed to support the economy when he said fiscal stimulus measures will be withdrawn.
Auto Firms may hike prices http://www.bloombergutv.com/industry-news/other-industry-news/36980/auto-firms-may-hike-prices-2-2-5-.html
India’s Stocks Fall on Demand Concerns; Maruti Leads Declines http://www.bloomberg.com/apps/news?pid=20601091&sid=aL.dhEanyOus