CEAT, Pricol: Auto ancillary stocks look set to rally further, charts show

With a "Higher High, Higher low" formation, the stock of Pricol has gradually risen to higher levels recently.

Despite localised lockdows across states, shares of the auto ancillary firms have held their ground so far at the bourses over the past one month. Shares of Jay Bharat Maruti, for instance, are up 49 per cent over the past one month while those of Automotive Stampings and Assemblies, Motherson Sumi, Wabco India, JBM Auto, Hindustan Composites, Pricol, Minda Corporation, and Munjal Auto Industries are up between 10 per cent and 21 per cent, ACE Equity data show. In comparison, the Nifty50 and the Nifty Auto indices have gained 3 per cent and 6 per cent, respectively during the period.

On the ground, however, automobile manufacturers have shut production facilities amid surging Covid-19 cases. Maruti Suzuki India, the country's largest carmaker, said last week that it has extended maintenance shutdown of its plants till May 16. Hyundai Motor India, meanwhile, has commenced annual maintenance shut down at its Chennai-based manufacturing facility for six days starting May 10. Eicher Motor, M&M, Bosch, and Hero MotoCorp, too, have shut production facilities. 

Against this backdrop, will auto ancillary stocks extend their rally? Here's what charts say:

CEAT Limited (CEATLTD)

Likely target: Rs 1,420 (if holds 200-DMA)

Upside potential: 8.40%

After breaching the 50-days moving average (DMA) on the downside, the stock failed to regain momentum and has continued to slide down towards the 200-DMA currently placed at Rs 1,212 levels. One can clearly see selling pressure mounting around 100-DMA placed at Rs 1,420 levels. Now, if the stock manages to hold the 200-DMA then the positive momentum may see a rally towards 100-DMA, as per the daily chart. The Relative Strength Index (RSI) has moved up the oversold condition suggestive of the rebound, as per the daily chart. CLICK HERE FOR THE CHART

Pricol Limited (PRICOLLTD)

Likely target: Rs 100

Upside potential: 17%

With a "Higher High, Higher low" formation, the stock has gradually risen to higher levels recently. The current momentum shows profit-booking around Rs 85-mark. Going forward, this level needs to be conquered decisively to breakout on the upside towards Rs 100-mark. On the downside, the stock needs to defend the support of Rs 75 on the closing basis to keep the medium-term outlook optimistic. CLICK HERE FOR THE CHART

Minda Corp Ltd (MINDACORP)

Likely target: Rs 125 - Rs 132

Upside potential: 16.82% - 23.36%

The current scenario on the daily chart reflects that the stock is attempting to breakout above Rs 110-mark. The stock is seeing healthy, volumes-based buying and if it manages to sustain above Rs 110 levels, the upward breakout may see a rally towards Rs 125 and Rs 132 levels. On the downside, the support comes at Rs 97-mark, as per the daily chart. The overall trend displays a bullish sentiment. CLICK HERE FOR THE CHART

GNA Axles Limited (GNA)

Likely target: Rs 380 - Rs 390 (only if the 100-DMA is held firmly)

Upside potential: 4.11% - 6.85%

The stock is currently trading within a consolidation range of Rs 430 to Rs 330 levels, as per the daily chart. The Moving Average Convergence Divergence (MACD) has fallen below the zero line, suggesting a weak sentiment. That said, the stock is currently holding the support of 100-days moving average (DMA), placed at Rs 360 levels, and if it manages to hold on, then the trend reversal may see a bounce towards Rs 380 and Rs 390 levels. CLICK HERE FOR THE CHART
 
Amara Raja Batteries Limited (AMARAJABAT)
 
Likely target: Rs 700 - Rs 680 (if Rs 750 is broken)

Downside potential: 6.67% - 9.33%

This stock breached the 200-DMA resulting in added weakness and build-up of a negative sentiment. Further, if the immediate support of Rs 750 gets broken, the next downside may drag the stock towards Rs 700 and Rs 680 levels, as per the daily chart. The immediate resistance falls at Rs 825, below the 200-DMA level of Rs 836. CLICK HERE FOR THE CHART