AUTO STOCKS ; BUY ON DIPS

"BUY TATAMOTORS FUT ABOVE 402 TARGET 412 SL 396"
Tata Motors may be experiencing some uncertainty given its exposure to the UK, China and other markets. Maruti NSE -0.16% and Mahindra are the two names we like. Ashok Leyland NSE -0.70% is also doing well. If we see a meaningful correction of around 5-10%, we would definitely find solace in Auto.
Finally, we align ourselves with global weakness. Of course we still have a long way to go before we are fully consistent with the weakness that we have seen in the US but phase out tomorrow, the MPC result the day after and this morning with the SGX Nifty that we are clearly breaking that becomes 200 DMA from 16,990 on the index. Indian market will be tested for January or June out performance. Given the truth of the sell-off we have seen in global markets and the nature of the further development that has taken place in relation to potential rate hikes, we believe this will be somewhat difficult for us to navigate given the rush so aggressive. If you look at the FII figures for the past few days, it's around Rs 3,500-4,000 crore. That will be difficult to handle and I think that even in the domestic market we should brace for another 50-75 basis point rise and that will have some impact. Even if we correct another 3% to 5% at the index level people would be fine as we're already up quite a bit from June. We should just make sure we navigate this phase without much damage and look for opportunities where growth visibility is high.
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