Maruti, M&M, Eicher Are Analysts' Top Picks As Demand Expected To Improve; Nifty Auto Up
The Nifty Auto snapped an eight-day winning streak and settled 0.92% down at 21,737.60 on Tuesday.
Analysts suggested investors stay hopeful for the automobile sector, as demand will likely start to improve from April onwards, after the festive and wedding seasons start. India's demand for passenger vehicle and two wheelers have weakened in recent months.
The tax cuts, announced in the budget for financial year 2026, will soon start to benefit 3.5 lakh taxpayers. It will also increase their disposable income, which is expected to boost discretionary consumption. Moreover, the recent salary hike of public-sector employees will provide further boost to auto demand, Jefferies said.
Two-wheelers and passenger vehicles will likely grow at a CAGR of 14% and 9%, respectively, over financial years 2025 and 2027, according to the brokerage. Mahindra & Mahindra Ltd., Eicher Motors Ltd., TVS Motor Co., and Maruti Suzuki India Ltd. are its top picks in the sector.
BofA said that April will be a crucial month to monitor growth revival in India's automobile space, due to the wedding and festive season. Further, liquidity easing will also likely help in creating demand. The brokerage prefers Eicher Motors Ltd., Mahindra & Mahindra Ltd., and Maruti Suzuki India Ltd.
Weak Demand In Past
Retail trends for both the two wheeler and passenger vehicle segments were weak in March, BofA observed after analysing registration data and talking with dealers. The walk-in enquiries for car purchases have also been subdued.
India's demand for two wheelers and passenger vehicle registration dropped 11% and 6% year on year in March and February period, Jefferies said. The inventories have risen in passenger vehicle segment, while there's finance underwriting in two wheeler amid a weak underlying demand.
The NSE Nifty Auto rebounded on Wednesday. The index rose 0.62% to 21,872.55. It was trading 0.04% higher at 21,746.75 as of 9:48 a.m., as compared to a 0.09% decline in the NSE Nifty 50.
The Nifty Auto snapped an eight-day winning streak and settled 0.92% down at 21,737.60 on Tuesday.
Exide Industries Ltd., Samvardhana Motherson International Ltd., Ashok Leyland Ltd., and Bosch Ltd. were leading gains in the Nifty Auto.
Meanwhile, Apollo Tyres Ltd. was the top loser in the Nifty 50.
