Positive on auto, expect rate cuts to revive PV, two-wheeler sales: Varun Goel
, Senior Fund Manager,
Mirae Asset Investment Managers
, says the auto sector is poised for growth due to monetary easing and anticipated rate cuts, which are expected to lower EMIs and boost sales in both passenger car and two-wheeler segments. A positive monsoon is favoring tractor companies, while
premium motorcycles
and SUVs continue to thrive due to the ongoing premiumization trend in the Indian market.
What is your view on the entire auto pack? Lots have happened with Nifty Auto on Tuesday. It is the top sectoral gainer. Hero Moto has been outperforming the market. Plus there was Tesla's entry into India with a Mumbai showroom. Where do you see auto as a pack headed?
Varun Goel: As far as auto is concerned and for that matter other various cyclical sectors, the growth outlook should get better because of the significant monetary easing that we have seen so far this financial year and with inflation data continuing to remain benign, we expect further rate cuts in the future. Our view is as EMIs are reduced both for home loans and auto loans, the auto sector should benefit. We expect a revival in sales as far as the passenger car industry is concerned.
Even on the two-wheeler side, sales growth should improve as we approach the festive season. We like companies in the tractor space considering that the monsoon continues to be good. The higher-end motorcycle and SUV spaces also continue to do well as the premiumisation story in the Indian vehicle market continues to play out. So, we maintain a constructive stance on the auto space going forward.
The other pocket that is doing well is the chemical pack and
Rallis India
came out with a very good set of numbers. What is your analysis on the chemical pack because, of late, a lot of these stocks are showing momentum but do you like any particular pocket within that?
Varun Goel:
As far as the chemical sector is concerned, we have seen almost three years of down cycle. Post Covid, the Chinese supply came back in a very significant manner because of which there was pressure both on realisations and volume growth. Incrementally, we would be more positive on specialty chemical names.
Companies which are in the battery chemical space and which are focusing on creating electrolytes and other battery related chemicals, is a niche theme that is expected to do well. Some of the water treatment and purification related chemicals is also a theme which looks interesting and so we would be positive on the sector in a selective manner.
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