Bajaj Auto & Tata Motors top auto picks for medium to long term: Amit Trivedi

“For the past few months, the auto index was outperforming the benchmark index. During the recent decline, Auto index decisively held its key support levels and recovery thereafter ensures further out-performance ahead,” says Amit Trivedi, CMT, Technical Analyst - Institutional Equities, Yes Securities.

In an interview with ETMarkets, Trivedi said: “Bajaj-Auto found renewed buying interest near its 2-year mean, whereas sustenance at current levels in Tata Motors could shove the rally into an even higher gear. Both the stocks remain buy side candidates from medium to long run,” Edited excerpts:

A strong week for Indian markets as benchmark indices rose nearly 3%. What led to the price action in the week gone by?
Post the multi-week decline, renewed buying interest emerged in the Nifty50 near its 2-year mean.

Initially, the Nifty50 defended levels of 15200 on a closing basis, while stability helped to improve the internal breadth of the Nifty.

Recovery across the sectors (except IT index) in Friday’s trade with India VIX cooling off below levels of 21 bolstered Nifty to settle near levels of 16700 zone.

Where do you see Nifty and Nifty Bank headed in the June expiry week? Any important levels which one should watch out for? Do you think the bounce will sustain?
Nifty is likely to contest with a layer of resistance near 15863 (i.e. high of large bearish candle formed on 16th June); and hence price action near this zone needs to be closely watched out.

A decisive breakthrough above for the same is essential to unlock upside potential till 16200.

BankNifty decisively held its March month’s low, pullbacks should be considered as buying opportunity, mild upside till 34000-34200 is possible.

We will move in the final week of the first six months of 2022. Sensex and Nifty are down by over 7% in the last six months. What is your outlook for the rest of 2022?
The Nifty50 mostly traveled south in the first half of 2022. After losing 18% off the record high, the Nifty50 is expected to digest its multi-month decline.

Unlike the first six months, a major downside in the rest of the year 2022 is unlikely.

Sectorally, auto stocks bucked the trend, up 5-6% in a week. What led to the price action and do you think the outperformance will continue in the coming week? Any strong performers which investors can watch out for?
For the past few months auto index was outperforming the benchmark index. During the recent decline, the auto index decisively held its key support levels and recovery thereafter ensures further out-performance ahead.

Bajaj Auto found renewed buying interest near its 2-year mean, whereas sustenance at current levels in Tata Motors could shove the rally into an even higher gear. Both the stocks remain buy-side candidates in the medium to long run.

Small & midcaps slightly underperformed were in line with benchmark indices in the week gone by. How should investors play the broader market theme in the second half of 2022?
This year so far, smallcaps have underperformed significantly against the benchmark index and Midcap space.

Smallcaps will take time to stabilize and we need to be extremely selective. However, the current decline should be considered as a buying opportunity in midcaps like auto ancillaries, Cement, and Power stocks.

Top 3-5 stocks that investors can buy in the coming for July series?
Improvement is seen in the price structure of stocks like Eicher Motors, Bank of Baroda, and Godrej Consumer Products. These stocks are expected to do well in the near term, hence corrective decline should be considered as buying opportunity.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)