Tata Motors & Hyundai: How to trade these 2 auto stocks? Kranthi Bathini answers

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said Tata Motors Ltd shares corrected sharply from Rs 1,100 level. "Investors now have a choice with respect to the EV (electric vehicle) space. After the listing of Hyundai Motor India Ltd, institutional investors have a choice concerning India's automobile theme as they have one more OEM (original equipment manufacturer). Fresh flows are getting into Hyundai Motors because they have a better portfolio when compared to Tata Motors. Also, Hyundai's financials look very attractive. Fresh money is not coming into Tata Motors at this point of time and its stock has been struggling," the market expert told Business Today on Wednesday.

"In terms of valuations, Tata Motors looks very attractive as well. With respect to the JLR (Jaguar Land Rover) portfolio is concerned, we can see some signs of demand picking up in China's market. Investors with a long-term horizon and high-risk appetite can add Tata Motors. Those with a moderate risk appetite can add Hyundai Motor. Investors have the choice to choose between Tata Motors and Hyundai Motors at this point of time," Bathini stated. Tata Motors attracts around 67 per cent of its revenues from Jaguar Land Rover while JLR gets nearly 27 per cent of volumes from China. Shares of Tata Motors edged 0.11 lower to settle at Rs 680.85 while Hyundai moved up 3.71 per cent to Rs 1,877.25 level.

The market specialist remained 'bullish' on the automobile sector. "We are quite bullish with respect to the auto industry. At present, the demand is very slow in the entry-level segment whereas there's a huge demand in the high- and the mid-end segments and that is where the OEMs need to focus going ahead," Bathini said.

Meanwhile, Indian equity benchmarks settled slightly lower today as losses in IT and pharma shares countered gains in banks and financials. The 30-share BSE Sensex pack slipped 28 points or 0.04 per cent to close at 75,939 and the broader NSE Nifty index shed 12 points or 0.05 per cent to finish at 22,933. Broader indices (mid- and small-cap shares) witnessed a rebound.

Six out of the 19 sector gauges -- compiled by the NSE -- traded in the red. Sub-indexes Nifty IT and Nifty Pharma underperformed the NSE platform by falling as much as 1.30 per cent and 0.71 per cent. In contrast, Nifty Bank and Nifty Financial Services rose 0.98 per cent and 0.80 per cent, respectively.

The overall market breadth was strong as 2,782 shares advanced while 1,182 declined on BSE.