Repo rate hike: Auto stocks gaining strength despite rate hike, says Prakash Diwan

Prakash Diwan, Head-Institutional Clients Group, Asit C. Mehta Investment Intermediates Ltd., in a chat with ET Now, gives his views on market outlook.

What is the call on rate sensitive stocks?

Essentially not only was the rate hike of 25 bps factored into the prices, we have seen very contrarian trend of sorts as far as automobiles are concerned particularly from interest rate sensitives. Reality is of course not something that I would really look at in a way that seems very robust but autos distinctly are gaining strength. Every week we have seen newer strength coming through. Even the likes of the 4 wheeler pack, some of the bigger ones like M&M, Tata Motors. It is really heartening to see the fact that they have got the strategy right in terms of flattening sales but making sure that at least profitability and margins do not get impacted so much. So while yes there is a top line growth which could look at some sort of a slowdown because of interest rate hikes, the companies are gearing up to withstand all this and come out much stronger at the end of this rate cycle and probably that is what everybody is also discounting in the prices now.