Maruti Suzuki shares hit fresh lifetime high, auto stocks rise ahead of monthly auto sales data

Maruti Suzuki share price

• Auto stocks rose on hopes of strong December sales data
• Maruti Suzuki hit an all-time high
• Strong IIP data also boosted auto sector shares

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The shares of automakers rose in trade on December 30 amid rising hopes for strong auto sales data for the month of December.

The sharp rise in the share prices pushed the Nifty Auto index up more than 1 percent to end the session at 27,889.65 and snap a three-session losing streak, with heavyweight Maruti Suzuki shares hitting a fresh all-time high.

Hopes for strong December auto sales data:

Analysts expect the automakers to post strong auto sales for the month of December. Nuvama Wealth Management said that these firms will continue to benefit from lower GST, which has led to better demand, Informist reported.

The brokerage expects double-digit year-on-year growth in sales volumes across categories for the month, it added.

"Sales volumes are likely to be driven by continued positive customer sentiments spurred by better affordability (courtesy GST cuts), new products, interest rate cuts and adequate finance availability despite some pressure on rural sentiments due to a drop in retail crop prices…Furthermore, we reckon exports shall rise in double digits led by growth in Asia, Africa, and Latin America," the domestic brokerage further said, as quoted by Informist.

"The auto sales numbers expected in two days will give an indication of the sustainability of the consumption boom in the economy. This is significant from the economic growth perspective, too," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Strong IIP data:

The rise in the auto stocks may have also bee driven by strong IIP numbers. India’s industrial production rebounded sharply in November, with the Index of Industrial Production (IIP) rising 6.7 percent—a 25-month high—from just 0.5 percent in October, data released on December 29 showed.

The recovery was broad-based, with strong improvement across all three major sectors. Manufacturing, which accounts for over 75 percent of the index, accelerated to an over two-year high of 8 percent, up from 2 percent in the previous month, providing the biggest boost to headline growth.

"Sector-wise, while auto stocks gained on robust IIP data," said Vinod Nair, Head of Research, Geojit Investments.

Top gainers on the auto index:

Hero MotoCorp shares emerged as the top gainer on the index, jumping more than 2 percent to snap a three-session gaining streak. Ashok Leyland and Bajaj Auto shares also jumped more than 2 percent each, while Mahindra & Mahindra (M&M) and TVS Motor Company shares gained nearly 2 percent each.

Bharat Forge and Tata Motors Passenger Vehicles shares rose nearly 1 percent each. Maruti Suzuki shares gained nearly 2 percent earlier during the day to hit a fresh all-time high of Rs 16,818 apiece, before paring some gains to close 0.5 percent higher at Rs 16,625 apiece.

Sona BLW Precision Forgings, Bosch and UNO Minda shares closed in the green with marginal gains. Bucking the trend, Royal Enfield-maker Eicher Motors, Exide Industries and Tube Investments of India shares fell more than 1 percent each.

Samvardhana Motherson International shares also closed in the red with marginal losses.