It seems interest rate scenario has peaked, inflation is diving southwards and RBI has shown it’s concerned towards stunted economic growth. In this scenario we can safely assume that there will be no further rate hikes. As stock market discounts bad news and rewards good news it seems to be an ideal scenario where you should start including interest rate sensitive’s specially Auto stocks in your portfolio.

Historically speaking whenever there is a decreasing interest rate scenario auto stocks have outperformed the market. Let’s explore few good options which might be rewarding in another two or three months.

Maruti

It has recently touched a low of 900 and took bounced back well from there. The negative price movement was resultant of two driving forces working in tandem. First being the rising interest rate scenario and the other being strikes in their Gurgaon manufacturing unit. Both the issues seems to have reversed its direction and optimism regarding the stock is back on track. Same is being reflected in the price action. It’s recommended that you take exposure in this stock round 1050 and soon you might see price rising to 1200. Time horizon is round 2 months for desired returns.

M&M

M&M price is more lucrative for the time being as it is still trading below its resistance of 710. Once it crosses the 710 mark we will see more aggressive price actions. The only reason the stock is holding back is the high interest rate scenario. At the slightest hint from RBI regarding decrease of interest rate this stock might fly up to the levels of 850 in very short span. Buy it round current levels of 680 and wait till it breaks 710 on the upside with heavy volume.