Auto sector set to 'vrooom' with recovery in sales

The October auto sales numbers are set to kick-off from November 1. The numbers would be closely watched by investors amid recovery in the month of September, followed by festive season in October. Even the ongoing auto corporate numbers for Q2FY18 have been quite robust, giving further push to the buoyant sentiments in the sector. The earnings of frontliners have started smoothly. Maruti Suzuki, Tata Motors and M&M together hold nearly 47 per cent weightage in the Nifty Auto index. Maruti Suzuki has posted robust Q2FY18 numbers, with revenue and PAT rising 24 per cent and 59.6 per cent, respectively.

Technically, Nifty Auto index, as the representative of overall auto sector, witnessed a breakout of multiple resistances at 11220-11250 levels on October 27, 2017. Currently, the index has given three consecutive upticks, driven by robust earnings and expected growth in the monthly sales numbers. The upsurge in the index has been supported by rising volumes and the 14-period RSI rising from 62 to 70 in just three sessions. Even on a monthly basis, the index broke out of the 5-month consolidation and is likely ready for yet another positive rally. Hence, investors can keenly watch auto earnings and sales numbers and look out for opportunities to enter the stocks.