Avoid auto stocks for a while: Harendra Kumar, Elara Capital

In a chat with ET Now, Harendra Kumar, Head of Institution Broking and Global Research, Elara Capital, shares his views on auto sector.

ET Now: But in general, is it time to avoid autos?

Harendra Kumar: I would tend to agree with you here absolutely. It is reminiscent of previous down cycles but the first negative news is that the auto cos curtailing production in terms of clearing inventory at the dealer levels. So my guess will be the first victim would be the four-wheeler stocks and not necessarily the two wheelers. So the two wheelers will see some amount of convergence in terms of investors flocking to these counters. The four-wheelers will turn extremely vulnerable given the interest rate scenario and the current news flow that we are seeing and given that the industry is very cyclical. This is the first time that the industry growth rate is tapering off. I would be little wary of about them next to 2-3 months in terms of the overall sales volume growth.