Auto ancillary stocks an attractive buy on dips

Shares of auto component manufacturers have corrected up to 10 per cent in the last month after clocking a sharp rally in the previous financial year.

- SHIVAM TYAGI

The correction in the stocks is a good buying opportunity as the auto story remains strong from a long-term perspective due to the rising disposable incomes and a possibility of an interest rate cut in the future adding to the comfort of buyers, analysts said.

"The recent downturn in ancillary stocks has made the prices attractive. It's a good opportunity to buy at current levels as the overall sentiment in the auto sector remains strong," said Deven Choksey, MD, DRChokseyFinserv.

Shares of Apollo Tyres, MRF, and Bharat Forge have shed 10 per cent, 8.4 per cent, and 0.4 per cent, respectively, in the past month.

In comparison, the Nifty Auto index rose 4.4 per cent during this period, ACE Equity data shows. In FY24, the Nifty Auto index surged 77 per cent as against a 28 per cent rise in Nifty 50.