Auto shares in focus; Ashok Leyland, Hero MotoCorp hit 52-week high

Shares of automobile companies are in focus and trading higher by up to 8% on the bourses on expectations of above normal monsoon this year.

Escorts (up 8% at Rs 166), VST Tillers Tractors (5% at Rs 1,609), Ashok Leyland (3% at Rs 113), Hero MotoCorp (2% at Rs 3,048), Maruti Suzuki (2% at Rs 3,543) and TVS Motor Company (up 2% at Rs 321) were up between 2%-8% on the BSE. Ashok Leyland and Hero MotoCorp are trading at their 52-week highs.

At 10:53 am, the S&P Auto Index was up 1% or 182 points at 17,994 as compared to 0.37% rise in the S&P BSE Sensex at 25,114.

Skymet, a non-government weather forecaster, said on Monday that the year's southwest monsoon should be slightly ‘above normal’, at 105% of the Long Period Average (LPA). The error margin is plus or minus 4%.

Rainfall within 96-104% of the LPA is considered normal and anything above as 'above normal'. LPA is 889 mm, the average rain the country got in the 50 years from 1951.

Meanwhile, according to Religare Institutional Research, January-March (Q4FY16) quarter is likely to be a good quarter for the auto universe, with aggregate net profit growth of 68% year-on-year (YoY).

“In four-wheelers, Ashok Leyland, Eicher Motors and Tata Motors would report strong growth in the range of 71-88% YoY, but Maruti Suzuki India would be a laggard with 12% earnings decline. Among two-wheelers, Hero MotoCorp, Bajaj Auto and TVS Motors Company are likely to grow in the 8-41% range,” the brokerage firm said in Q4 preview.

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