NEW DELHI: Thanks to the rally over the past few weeks, the 15-share Nifty Auto index formed a ‘golden crossover’ on the daily chart in Monday’s session, which is considered a bullish signal.

A 'golden crossover' occurs when the short-term 50-day moving average crosses above the long-term 200-day moving average.

The Nifty Auto Index jumped over 2 per cent during the session to trade around 7,850. Motherson Sumi and Eicher Motors were the biggest gainers in the index, rising more than 5 per cent each. Bajaj Auto, Ashok Leyland and Hero Moto were among other major gainers.

Auto stocks came into focus after the companies said sales had recovered to almost pre-Covid levels. In the 11 sessions in August, the Nifty Auto index has closed in the green on nine occasions.

The index has gained every month starting April. However, year to date, it is still down 5 per cent.

Analysts believe the rally in auto and auto ancillary stocks will continue as valuations of these stocks have also come down sharply.

“In the past week or so, auto stocks have done well. Some traders are booking profits and I think that is kind of okay. Now, can these stocks continue doing well from here on? I think absolutely yes,” said Chakri Lokapriya, CIO & MD, TCG AMC.


Year to date, Hero Moto has been the biggest gainer, up 19 per cent, riding on the hopes that Covid-19 will lead to people choosing personal mobility options over public transport. And, two-wheelers could see a spike in sales. In the last one month, Motherson Sumi has been the biggest gainer, up 36 per cent.

“Economic activity is picking up in Europe and it is going into its summer, which will result in some rebound in industrial activity and also in consumer activity and all these are usually good news for auto and auto ancillary,” Lokpriya said.