Q1 numbers, crude oulook, midcap rally lifting tyre stocks: Harendra Kumar

In a chat with ET Now, Harendra Kumar, MD, Institutional Equities, Elara Capital, talks about his preferred picks in the tyre space.

ET Now: I am wondering what has changed for tyre stocks fundamentally. Nothing has changed, but tyre stocks have appreciated between 10 per cent and 15 per cent, on an average, in last two or three days.

Harendra Kumar. The lead out here is the MRF earnings, which was spectacular. The company has reported a jump in profits. The a section of the market is extrapolating similar trends for Ceat and JK Tyre. That is one of the primary reasons for the upsurge. In addition, it has much to do with buying that have come up in the auto and auto ancillary space. The third important point is that the crude outlook has turned more benign. With the crude price outlook falling further, per se the falling input cost which is a story that keeps running. Tyre stocks have just gained strength. Lastly, there is a sharp rally in the midcap space, where people are cherry-picking stocks and looking for momentum. All in all,these things are actually fuelling the trend in tyre stocks.