MC Interview: Hyundai seems slightly better positioned than Maruti Suzuki, says this investment advisor

We’ve been closely tracking monthly sales data in the auto sector. While growth in the passenger vehicle segment is expected to remain subdued, we anticipate low double-digit growth in the two-wheeler segment. However, September's sales were muted due to the Shradh period, and the upcoming festive season will be crucial in gauging demand at the dealership level. The current sales figures might reflect inventory being stocked ahead of the festivals, so we’ll be watching the actual retail sales closely.

Which sectors have you chosen for investment during the recent correction?

Our focus remains on areas where valuations are not overstretched. Despite the recent market correction, valuations in several stocks that rallied on optimistic narratives still don't offer attractive entry points. We continue to position defensively, with allocations towards pharma, IT, and consumption sectors, along with banking, where valuations remain within a reasonable range.

Do you think Maruti Suzuki is a better-valued stock than Hyundai Motor India?

The auto sector is witnessing two significant trends—premiumisation and the shift toward clean energy, which are pushing prices higher. When comparing Maruti Suzuki and Hyundai, their current valuations are quite close. Hyundai’s focus on SUVs and premium models like the Creta and Verna, combined with its upcoming EV launches, offers promising growth opportunities. Maruti, on the other hand, has gained traction with its strong hybrid models like the Grand Vitara and Invicto. The market will need to see how customer preferences evolve between EVs and hybrids. As of now, Hyundai seems slightly better positioned, thanks to its higher mix of SUV sales benefiting from the premiumisation trend.

Do you believe the market will not rebound to see fresh record highs before the US elections?

We expect markets to remain volatile in the run up to US elections making fresh high unlikely, though it may not be only the elections driving it. Domestic factors like earnings season which delivered another muted growth numbers along with tightening in derivatives market rules to reign in speculation are likely to weigh on the investor sentiments. On the global front, uncertainties in Middle East along with FIIs rebalancing towards China in the recent weeks are the factors being tracked. Any negative news on these near term risks can trigger another round of corrections.

Are private banks undervalued? Does this mean one should start accumulating them?

Larger banks are fairly valued, having lagged during the past year’s market rally. However, smaller banks appear more attractively valued relative to their historical averages. The primary concern for the sector remains pressure on net interest margins (NIMs), though asset quality is largely stable across major segments. We prefer banks with a strong deposit and CASA (current and savings account) base, as well as non-banking financial companies (NBFCs) with a focus on the housing finance sector.

Should one wait for the US elections to buy technology stocks?

Investment decisions should be driven by sector outlook and stock-specific targets rather than being timed around events like the US elections. We would consider increasing exposure to tech stocks if volatility leading up to the elections provides attractive entry points, particularly if further market corrections occor.

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