Use dips to add auto stocks despite chip shortage concerns
Published On: Wednesday, September 1, 2021 | By: Team KnowMyStock
The shortage of semiconductors and chips has hit the Indian automobile sector hard and after Tata Motors, Maruti Suzuki India has slashed output target for September due to a chip shortage. Yesterday (31st August 2021) Maruti Suzuki said that its vehicle production in September will tumble by 60 percent. The company, which had earlier cut down production at its Gujarat plant, said the chip shortage will hit production in Gurugram and Manesar plants, effectively forcing the automaker to cut production by 60 percent. Consequently, shares of the automaker declined 2 percent to Rs 6,700 on the BSE. The ripple effect dented other shares as well with stocks of M&M, Ashok Leyland, and TVS Motors slipping up to 1 percent.
NIFTY AUTO INDEX
Likely target: 10,200 to 10,250
Upside potential: 1.50% to 2%
After breaching the 200-days moving average (DMA), the index had signaled a negative trend. However, the bearish sentiment was reversed near the gap-up range of 9,664-9,662 levels, seen in early May 2021, which assisted in building a support base. Now, the index is making attempts to sustain above the 200-DMA, which is placed at 9,998 levels, then we may see a rally towards 10,200 to 10,250, which are its 100-DMA and 50-DMA. The support stays at 10,007 levels, as per the daily chart.
1. Tata Motors Ltd
Likely target: Rs 306 and Rs 312
Upside potential: 5.50% to 7.50%
2. Maruti Suzuki India
Likely target: Rs 6,200
Downside potential: 8%
3. Mahindra & Mahindra Ltd
Likely target: Rs 821 and Rs 835
Upside potential: 2.60% to 4.50%
Tags: shortage of semiconductors and chips Indian automobile sector Tata Motors Ltd Maruti Suzuki India Mahindra & Mahindra Ltd
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