Automobile stocks made strong gains in the past year. Helped by an early return to profit growth and strong sales in recent months.
M&M up over 70% from their last August prices. It may go up to 970-975, where the scrip faces stiff resistance and a trend reversal happens. If it sustains above 975 (Jan`07 price), 1050 level a possibility. My personal view on M&M...
Generally, most of the auto stocks have risen dramatically in recent times. Now most of them are in the over-bought zone and needed correction which happened today to some extent. While the Sensex is down around 2.45%, the auto stocks tumbled nearly double this percentage. Moreover, September-March will be a dry period and sensing this, most of the prudent investors exited this sector`s big stocks. In my opinion, it is better to leave this sector for the near term and concentrate on the Tea stocks and oil and oil marketing stocks. Good Luck!
I agree with you. My expectation was a reversal of trend in M&M around 970, but it happened at 945. All the auto stocks gained more than 70% in a short span, needs a healthy correction to sustain.
Yes, trend reversal occurred a bit early. Anyway, can be bought at lower levels. This company has a bright future since it is beginning to export to US, Africa. After US acceptance, Europe will be easier since their technical standards are slightly lower and US standards are accepted for most parts. Definitely worth accumulating for LT. In auto sector the companies worth holding for LT are M&M, Maruti, Tata Motors, Bharat Forge.
There are no lowest levels fixed. If you do that, there is the very real danger of it not being reached at all (so you can`t buy any) or it breaching it downward with a big fall so you are left with losses (since no one can predict and buy at absolute bottom with any certainty). The way is to earmark a max amount for any stock and percentage profit you want. Then buy 20% of amount earmarked everytime the stock falls 20% from where ever it was. Sell when you gain your profit level.
eg if you earmarked Rs 25000 for Maruti, buy 5000 worth when it dropped 20% from high of 1550. Now hold till it gets a profit of 20% (assumed figure) from 1550. This is only for LT investors. For ST, the profit levels are much smaller.
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