Thursday, January 21, 2010

BSE AUTO Showing Signs Of Tiredness
BSE AUTO INDEX (7549) is showing signs of tiredness and technically there is a rising wedge developing which is yet to break down. 7400 and 7000 are important supports for the index and if these are taken out the correction can be deep. Euphoric rally is not ruled out in Autos only if breakout from wedge to upside happens but given individual stock structures and the great run-up of Autos in 2009 it is advisable to take profits in these stocks. Valuation-wise P/E of Auto Index shown by BSE is above 23 currently, which may go lower after Q3 results as they are expected to be very good but Year 2010 may not be so easy for Auto companies as the base of 2009 is high now. 

Nifty is also showing similar pattern of rising wedge and if broader markets correct AUTO may underperform.

Indian auto cos to fast-track R&D
Indian automakers are under growing pressure to scale up spends by 25-30% on R&D and new product launches. A change of habit is in order in the face of fierce competition from global rivals looking to lure consumers with superior product innovations and cheaper, compact models in the Indian automobile market, among the last bastions of growth.
Even though they spend more on R&D, raising prices would be a worry after a point of time as increasing competition would keep check on prices automatically.

Auto industry may be heading towards excess capacity by 2012
The domestic auto industry may turn into a buyer's market by 2012. This is because consumers are set to get spoilt for choice with the variety of competing products slated to be launched in the next few years. There is, however, a lingering fear that the capacity addition across the industry may lead to a far higher supply growth than the demand, which is expected to grow only by 10-12 per cent. This, however, may just be to the benefit of the consumer, as with increased competition across segments, manufacturers are expected to price products even more competitively.

Auto Expo 2010: Over 2 million visitors, 25 new launches

World Bank Says Asia Faces Asset Bubbles, Overheating Risks

Scripwise Weightages in BSE AUTO as on 20-Jan-2010
Scrip CodeCompanyClose PriceFull Mkt. Cap.
(Rs. crore)
Free-Float Adj. FactorFree-Float Mkt. Cap
(Rs. crore)
Weight in Index
500520MAHINDRA & M1,145.8532,063.320.7524,047.4919.06
500570TATA MOTORS803.2038,531.470.6023,118.8818.32
500182HEROHONDA M1,678.5533,518.550.5016,759.2713.28
532977BAJAJ AUTO1,820.2026,335.290.5013,167.6510.44
500086EXIDE INDUS119.009,520.000.555,236.004.15
500530BOSCH LTD4,925.1515,464.430.304,639.333.68
500480CUMMINS INDI446.108,832.780.504,416.393.50
500493BHARAT FORGE293.406,532.620.603,919.573.11
500477ASHOK LEYLND55.607,396.680.503,698.342.93
520077AMTEK AUTO L182.402,662.510.701,863.761.48
500877APOLLO TYRE.54.352,739.370.651,780.591.41
500290M.R.F LTD6,174.202,618.570.601,571.141.25
500495ESCORTS LTD.141.051,279.460.70895.620.71

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