Wait and watch before you enter auto stocks: Sandeep J Shah

In a chat with ET Now, Sandeep J Shah, CEO, Sampriti Capital, shares his views on auto stocks.

ET Now: How do you play auto now?

Sandeep J Shah: Earlier, I said that around 4600 to 4800 levels we might look to buy auto stocks which is only 2 wheelers. I had mentioned very clearly that we would wait to see whether we see a petrol price hike and whether we see a diesel price hike and then only would we actually look to buy out there. So if we do not see a diesel price increase but we see an increase in diesel engines is going to affect everybody. Even Maruti has 40% or so of their sales coming from diesel cars. Maybe an M&M out of the utility vehicles and cars may have a much higher percentage but the point is that everybody has a very large percentage of volumes coming from diesel cars.

So you want to wait for that and the call that we have been taking is that we have been more positive on the 2 wheelers. And the part of the reason is that in an environment where petrol and even diesel price or diesel price engines may go up, there is a chance of down trading and that people might actually switch more to two-wheelers. In the case of Hero Honda, they are doing very well in the economy segment. If you look at Bajaj Auto, even though there are short term pains, they obviously gain from a falling rupee. So both of them are different plays. The focus would be on the two-wheelers rather than the four wheelers till such time that we actually see the events pan out and see the affect that these events have on volume terms.