Nifty may test 5400-5600 but sell on rise now: Dipan Mehta

Q: How would you play the entire auto space? In particular Tata Motors , which will come out with numbers tomorrow? What about  M&M , which announced a good set of first quarter earnings but the outlook does seem a bit cautious in tractor sales because of the drought situation?

Mehta: Over the years the entire profile of M&M has changed. Their export market have picked up and sales are coming from the urban areas as well. The tractor business does get impacted by poor monsoon. We had a good monsoon last year around, to that extent the demand may still be holding up. However I think very good set of numbers came in from M&M. The stock was a bit of a underperformer and a lot of investors were underweight in it. That correction seems to be taking place at this point of time.

Unless we see interest rates declining in a decisive manner one should remain underweight on autos. The results for two-wheelers have not been upto our expectations. Tata Motors is more like an international company, which is listed in India. Its very difficult to call exactly what the trends are globally for the auto industry and how it will actually evolve in terms of bottom-line numbers for Tata Motors. It is best to wait for results and see what the management has to say and then take a call on the stock. The valuation is on your side, but over the past three years, since the acquisition of JLR the company has become very difficult to track from an Indian analyst point of view.