Egypt import ban pushes Bajaj Auto stock down

Investors seen liquidating long positions in the stock

Stocks of Bajaj Auto took a beating and declined by about 4% on Friday after the Egyptian government proposed a ban on import of three-wheelers and bikes. The scrip of Bajaj Auto came under pressure as investors liquidated long positions in anticipation of a decline in exports for the company.

On Friday, the Bajaj Auto stock ended the day down 3.4%, or Rs 65 per share, and closed at Rs 1,839.90.

Analysts said that the stock, which had already been declining due to fall in domestic demand, could continue its downward trend.

“For the past three to four months, at every expiry, investors had been carrying forward long positions into the next series. However, despite good results, the stock has been unable to perform which has forced investors to close these long positions,”said Amit Gupta, head of derivatives, ICICI Direct.

Analysts foresee a further drop of only about 2-3% as the stock has already seen a decline of about 15% since the beginning of the December quarter. The stock touched a 52-week high of Rs 2,193 in October 2013.

According to market participants, the stock would continue to remain at the Rs 1800-levels until the next upmove.

“The two-wheeler segment is still under pressure even though the balance sheets look ok at this point. The domestic demand still remains subdued which is a big concern for these stocks,” said Sonam H Udasi, head of research, IDBI Capital.

On Friday, the BSE Sensex closed the day up 173 point or 0.9% at 20,366. The NSE Nifty ended the day up 47 points or 0.8% at 6,048.

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