Maruti Suzuki, Tata Motors: Auto stocks face major hurdles amid Covid surge

Car market leader Maruti Suzuki India, on Saturday, said it was extending the maintenance shutdown, which was from May 1 to 9, till May 16, “keeping in view the current pandemic situation”. A host of other automobile manufacturers, including Mahindra & Mahindra, Toyota Kirloskar, Honda Motorcycle and Scooter India, Ford India, and BMW India, have taken a call either to advance the shutdown or extend it due to the pandemic.

In a report, Centrum Broking said that April was anticipated to be a good month for two-wheelers on the back of mini-festivals at the regional level and marriage season demand in the rural areas, the OEM's had prepared their channels with stock.

However, with the rising Covid cases, states like Maharashtra, Madhya Pradesh, Jharkhand, and Delhi started imposing lockdowns as a result of which, the wholesales of domestic two-wheelers got impacted especially in the lower cc-segments, with month-on-month sales of Hero MotoCorp, Bajaj Auto and TVS Motors declining by 37 per cent, 30 per cent and 35 per cent, respectively, in the domestic market. READ MORE

Even in the financial markets, automobile and financial stocks dominate the list of companies where analysts have scaled back their earnings estimates for FY22 following the lockdowns announced in several states to halt the spread of the coronavirus. Analysts say there could be further cut in earnings if the second-wave doesn’t peak soon. READ MORE

In light of these developments, here's how top auto stocks look from a technical viewpoint

NIFTY AUTO INDEX

Likely target: 10,500 (if it conquers 50-DMA and 100-DMA)

Upside potential: 4.90%

The index needs to conquer the 50-day moving average (DMA) and 100-DMA placed nearby, at 10,010 and 994 to break out on the upside. If that happens, the next rally may move towards 10,500 mark. The closing basis support comes at 9,500 levels, as per the daily chart.  The Relative Strength Index (RSI) is trading with a positive crossover, suggesting an upward sentiment. CLICK HERE FOR THE CHART
 
Bajaj Auto Limited (BAJAJ-AUTO)

Likely target: Rs 4,200 (after crossing Rs 4,000)

Upside potential: 5%

With a formation of “Double Bottom”, the counter broke out above the neckline of Rs 3,760 mark and rallied towards the next resistance of Rs 4,000 levels. Going forward, upon crossing this resistance, the counter may see an upside towards Rs 4,200 mark, as per the daily chart. The Moving Average Convergence Divergence (MACD) has successfully crossed the zero line upward, which reflects a positive sentiment with an upward direction. CLICK HERE FOR THE CHART
 
Maruti Suzuki India (MARUTI)

Likely target: Rs 7,087 (after crossing the resistances)

Upside potential: 3.15%

A “Death Cross” of 200-DMA and 50-DMA has dismantled the bullish sentiment. However, the counter managed to show rebound, making a short-term support of Rs 6,400 levels.  Going ahead, the resistance of Rs 6,800 and Rs 6,870 need to be conquered to rally towards Rs 7,087 levels, which is its 200-DMA. The RSI is attempting to break out above the resistance of  51 value, as per the daily chart.  CLICK HERE FOR THE CHART
 
Hero MotoCorp Ltd (HEROMOTOCO)

Outlook: Sideways movement (consolidation phase)

The current momentum shows a sideways movement in the counter. The counter needs to scale above the resistance of Rs 3,000 levels decisively to start a fresh upside. On the downside, until the support of Rs 2,740 is held, the positive bias may see revival in trend. Any breach of these levels may see a rally of nearly 250-300 points.  CLICK HERE FOR THE CHART

Mahindra & Mahindra Ltd (M&M)

Likely target: Rs 850 - Rs 865 (only after breakout above Rs 809 mark)

Upside potential: 5.07% - 6.92%

The counter is clearly witnessing the resistance of Rs 809 levels, which is its 50-DMA, as per the daily chart. Nevertheless, the counter is holding the support of 200-DMA, placed at Rs 717 levels, indicating a firm strength. On the technical parameters, the RSI needs to cross the hurdle of 55 value to forge a positive strength in the counter. A breakout above Rs 809 may lead to Rs 850 and Rs 865 levels. CLICK HERE FOR THE CHART
 
Tata Motors Ltd (TATAMOTORS)

Likely target: Rs 320 - Rs 330 (after conquering Rs 309)

Upside potential: 3.23% - 6.45%

Until the resistance of 50-DMA, placed at Rs 309, is not conquered actively, the upside breakout may not see aggressive momentum. The support comes at Rs 279, which is its 100-DMA, as per the daily chart. A decisive breakout may see the levels of Rs 320 and Rs 330, which are the next resistance levels. The volumes have been sluggish, indicative of the lower interest of market participants. CLICK HERE FOR THE CHART