Maruti, Tata Motors: Auto stocks likely to gain as August sales improve

Sales for most automobile companies in India inched up in August over the same month last year. Maruti Suzuki, for instance, reported a jump of 20 per cent in domestic sales in August, the car market leader said on Tuesday. During the month, the local arm of the Japanese carmaker despatched 116,704 units over 97,061 units a year ago.

Despatches at India’s top two carmakers — Maruti Suzuki India (MSIL) and Hyundai Motor India (HMIL) — zipped past not only the pre-Covid phase, but also the months preceding the pandemic, indicating long-built pent-up demand. READ MORE HERE

With the demand on an upswing, technical charts indicate more headroom for select stocks from this sector. Here are the key levels you need to keep a tab on.

NIFTY AUTO: The medium-term outlook appars optimistic with the technical charts depicting a “Golden Cross” formation of 50-days moving average (DMA) and the 200-DMA. The current price hints at a mild correction as the Relative Strength Index (RSI) was in an overbought condition recently. The immediate support comes at 7,700 levels. The next defending level is 7,500, which witnessed buying earlier. CLICK HERE FOR THE CHART
 
Hero MotoCorp Limited (HEROMOTOCO): A strong move above Rs 2,800 levels has given more strength to the counter. A “Golden Cross” on the daily and a breakout on the weekly chart strongly suggest a buying momentum to emerge around the support range of R 2,850 to Rs 2,920. Some mild correction may emerge for a few sessions as the RSI has formed a 'Double Top', as per the daily chart. CLICK HERE FOR THE CHART
 
TVS Motor Company Limited (TVSMOTOR): The weekly chart clearly shows that the stock is facing resistance the 200- weekly moving average (WMA) currently placed at Rs 479.50 levels. This suggests that the selling momentum may gain strength if the price fails to rebound aggressively. The support stays at Rs 420 levels. Rs 443 is the crucial level to watch out for as a breach of this level on the downside on a closing basis may signal a trend reversal. As the Moving Average Convergence Divergence (MACD) has crossed the zero line, the weakness or corrective moves may not see aggressive buying. CLICK HERE FOR THE CHART
 
Tata Motors Ltd (TATAMOTORS):  This counter is testing the resistance of 100-WMA placed at Rs 148.60 levels. The outlook looks promising as the MACD has made a firm move above the weekly zero line, which is indicatve of the underlying strength. The support comes at Rs 128 levels, which also is it 50-WMA. The immediate support, however, is at Rs 137 levels, as per the daily chart. CLICK HERE FOR THE CHART
 
Maruti Suzuki India (MARUTI): The stock has been hovering around the 200-WMA placed at Rs 7,020 levels. To breakout on the higher side, the price needs to scale above Rs 7,200 levels. The current momentum indicates a mild weakness, which could find support in the range of Rs 6,780 to Rs 6,700 levels. The medium-term trend remains bullish till the stock is able to hold Rs 6,490 levels, which is it 100-WMA. The MACD has crossed the zero line, indicating positive bias for now. CLICK HERE FOR THE CHART