Jay Thakkar is bullish on Ceat and M&M. Here’s why

Jay Thakkar, Vice President & Head of Alternate Research, Sharekhan, says the entire segment is likely to outperform from here. The auto space is already doing good so auto ancillaries are also likely to do well. The Nifty Auto Index itself is likely to reach 15,000 levels going forward.

There is a lot of traction in tyre stocks. Ceat is sitting at an all time high level, Apollo Tyres is higher. I think you like Ceat from the pack?
Absolutely. I do like Ceat at these levels and I would say that it is trading in the Rs 2,120-2,130 range and on the upside I have a target of Rs 2,250-2,350. And on the lower side, 2010 is the level wherein it is a reversal on the lower side at least for the short term. Now tyre stocks are definitely on fire. Balkrishna Industries has provided a very nice breakout from consolidation.

Why I have chosen Ceat is because it is trading at its lifetime high and with this breakout on a long term chart as well it has started its wave-3 on its way up. So it is a big breakout on longer term charts as well along with the short term momentum.

Apollo Tyres from the F&O pack, maybe TVS Sri Chakra are doing really well.

The entire segment is likely to outperform from here. The auto space is already doing good so auto ancillaries are also likely to do well. The Nifty Auto Index itself is likely to reach 15,000 levels going forward.

From the entire passenger vehicle space which are the stocks you like and a view on M&M as well?
I would say this is one of the stocks which one should definitely have in the portfolio for the medium to long term. The reason: being that the highs of around say Rs 980-1,000 approximately were made somewhere in 2018.

2017-18 is the year when the auto sector peaked out and despite Nifty going up until 2019 or maybe Jan 2020, prior to Covid, auto was not performing and the entire auto sector actually was falling, underperforming the broader markets or the benchmark indices I would say. But then the kind of recovery which we have seen since Covid lows in the auto pack 2018 highs are taken off. It is just that Maruti has not taken off that high among the passenger vehicles. Else you know most of the auto stocks have actually taken off those levels, maybe Tata Motors that is also one stock which I like and M&M too. I do not see M&M now going below the levels of Rs 1,000 and in fact I would say that it has recently retraced 38% of its recent move. This is a good level to enter as well if at all there is a dip, definitely add M&M 1000 for the long term and Rs 1,100 for the short term are the two crucial support levels.

Going forward, there will be much higher levels. Maybe in the short to medium term, Rs 1,500 plus and in the longer term, maybe this stock is heading towards Rs 2,000 levels as well going forward. This is one stock which I am actually quite bullish on for the medium to long term perspective.