Why don’t we start by discussing the auto sector itself. Of course, fundamentally, there are many things at play from rural recovery, CV upcycle to all the upcoming IPOs from Hyundai as well as Ola, but on the chart are there any recommendations to be made here?
Yes, I think you are right, the momentum in the auto sector is quite good. I have searched for stock two-wheelers that have quite a lot of outperforming in this regard. But I also saw four-wheeled vehicles involved. So, of course, like some of the names in the region, of course, TVS Motor, Hero MotoCorp, they are doing well. Maruti started to pick up, I’m somewhere that also has to join the whole move and so what’s really happening. I think the auto sector is going to get an additional trigger when bond yields actually start to come down because it’s an interest rate sensitive sector and I think we’re on the cusp of a reversal in the interest rate trend as well, so I think there will be. Additional triggers for the car sector are pretty much across the board. So, it should remain a strong sector for the coming months.
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But what about the strength in the index itself? We have reached the latest record. Is this the momentum that you want to sustain or will it be sideways, profit orders ahead of the budget, what do you want and how can you play in the market, let’s say, for the next, one-and-a-half months?
If we only talk about good things, I would have liked to see some kind of consolidation or rather pullback at this point after four-five-days of one-sided movement after the election results. But we really don’t see it. In the meantime, the VIX has dropped to sub-15, so it’s generating some comfort. It was almost 30 before the election result which is too high to really play the market, now back to 14.5 types of reading.
If it goes down to 13, 12, whatever, that’s the comfort zone now. Once you have sub-15, adjustable volatility when trading, set a stop loss.
So, I think that makes us up for the potential to continue to move up. But I think it can stay. Look, until we actually get over 23,600, we can stay in pre-budget consolidation mode.
But if we can go through that range, then it looks like a budget rally and even if you pull back a lot, I would see the buying going down and even from there you can start an expectation rally to the budget. , so that is a set of possibilities, which means the downside is limited.
We just don’t know how much time or price-wise it will be, but eventually we will be heading higher and that’s what we need to be prepared for.
In fact, there may be many specific movements of stocks to watch out for, event for event like, for example, tonight we have the FOMC meeting where we will talk about rates and again that brings us back to sensitive levels.
Also focus a little on the commodity sector as US tariffs have a direct impact on the US dollar. We have seen a short-term correction in commodity prices globally and once they start picking up the FOMC meeting, then the focus returns to metal stocks. So, those are some things to watch out for.
So, it’s great, I would say it’s not below 22,800 now, what we’re going to think about, eventually it’s going to be higher than 24,000, just one, yes, from here to the budget will be put together before we make the move. The call is a bit difficult. We have to take it day by day and see the opportunities in between.
