Stock Of The Day: Bearish Pressures Mount On Bajaj Auto Even As EV Market Share Peaks

Shares of Bajaj Auto Ltd. continued to come under bearish pressure even as the automaker topped the electric vehicle market share amid a surge in sales in the third quarter.

The stock has fallen over 30% into the so-called 'bearish territory' since hitting a life-high in September. The stock is currently testing the immediate support of the Rs 8,745-level, and a close below that could trigger further downside below the psychologically crucial Rs 8,500-mark.

Shares of the automaker traded below the 14-day simple moving average and 21-day exponential moving average. Significantly, the stock has been below the 200-day simple moving average for over a month.

A momentum switch to the upside could send the stock to the immediate resistance of Rs 9,000-mark. The stock rose by about 28% in 2024 and the relative strength index was at 31.

Bajaj Auto's shares fell as much as 2.8% during the day compared to a 0.35% decline in the benchmark Nifty 50 index.

Twenty of the 47 analysts tracking the company have a 'buy' rating on the stock, 11 suggest a 'hold' and 15 have a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 29%.

Bajaj Auto posted a 133.1% year-on-year growth in sales of electric vehicles in the third quarter, dethroning Ola Electric Ltd. to take the top place.

As per retail sales data from the VAHAN portal, Bajaj Auto had the highest market share at 25%, and is now a clear leader. This is a 3% jump from the previous month.

However, total two-wheeler sales saw a 4% decline to 2.72 lakh units in December compared to 2.83 lakh units in the same period last year. Total commercial vehicle sales rose 16% year-on-year to 50,952 units.

Emkay Global Research upgraded the stock rating to 'Add' from 'Sell' and kept the target price unchanged at Rs 9,500 apiece. The target price implied a 7.83% upside from Tuesday's close.

The recent stock-price correction— down 30% from its recent peak — captures the weakened position in the domestic two-wheeler segment and normalised volumes in the three-wheeler market, Emkay said.

Bajaj Auto is expected to benefit from exports recovery, the brokerage said. Key markets like Nigeria, which was previously affected by currency devaluation and inflation are stabilising.