Invest in auto ancillary on downside, says Pillai

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Invest in auto ancillary on downside, says Pillai

Neppolian Pillai of Modern Shares & Stock Brokers is of the view that one can still invest in auto ancillary on the downside.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » ALSO READ See previous views by Neppolian Pillai See what other Experts & Brokerages are saying about Asahi India See messages about Asahi India Asahi India BSE | NSE 28/05/12 Are Mutual Funds betting on Asahi India? Other Stocks in this news Cummins India | Mahindra and Mahindra | Tube Investments of India | Tata Motors |

Neppolian Pillai of Modern Shares & Stock Brokers is of the view that one can still invest in auto ancillary on the downside.

Pillai told CNBC-TV18, "I am still negative on auto technically at least. They are likely to go and hit a new low whenever this market corrects and  that one could see - Tata Motors  falling from Rs 791to Rs 685, Mahindra & Mahindra falling from Rs 838 closer to the Rs 700 levels. It has  given most of the gains in about three sessions that tells me that this sector could go down and hit a new low. I think within that auto component side, the smaller auto ancillary stocks looks good to me from an investment perspective. I picked up about two-three stocks  this time for this show.

He further added, "One can look Asahi India ; it is falling from about Rs 152 level, right now it's about Rs 105. I think if anybody can buy this between Rs 105 and Rs 95 levels, one can get a target of about Rs 130 that could be about 30% return. Another stock, which I like within the sector, is Tube Investments , its almost halved in value from Rs 130 to about Rs 50, right now about Rs 63 levels; I think Rs 63 to Rs 53 could be a buy zone. I think we should get a price target of about Rs 80 on the reversal so that's again a Rs 20-25% return. Momentum within the  sector, I think one can look at Cummins India ; great stock, great momentum now correcting on the downside. If you look between Rs  360-330 levels, I think this stock can eventually go and do a target of about Rs 430. So, I think auto ancillary one can still invest on the downside."

"Four wheeler autos, I think wait for it to gain traction on the downside, let it bottomout, it has still not done it. Two wheelers last time we  said it has already bottomed out so they are not going down much in this falling market. So the last month's pick would continue to  remain as a pick on the two-wheeler sector."