Street signs: Auto stocks on investors' radar, Gold ETFs outflow, and more

Auto stocks on investors' radar
 

Many analysts are projecting weak growth in car sales because of the economic downturn caused by the lockdown. However, some fund managers are taking a contrarian view. They believe people will be less inclined to use public transport in the post-Covid world and will prefer personal cars for commuting. This will provide a big boost to volumes, they say. “We have been big buyers of auto stocks, including Maruti Suzuki, even as some brokerages slashed its price target to below Rs 5,000,” said a fund manager. Shares of the country’s largest passenger car manufacturer are up 31 per cent this month. In comparison, the Sensex has gained 7.2 per cent.
 

---- Sundar Sethuraman
 

FPI holding in IndusInd nears ceiling
 

Private sector lender IndusInd Bank has caught the fancy of overseas investors. The trend is underscored by rapidly depleting investment legroom for overseas investors. At the end of last week, the available investment headroom for foreign portfolio investors (FPIs) was 12 million shares. This has now halved to less than 6 million. The buying by overseas investors saw IndusInd Bank’s shares surge 20 per cent last week, adding to the 26 per cent gain made in the preceding week. According to NSDL, the FPI shareholding in the stock is currently at 73.2 per cent, only 0.8 per cent below permissible limit. Experts say, investors should trade with caution as the stock is in the FPI ‘red flag’ list. “In an event the FPI holding exceeds the limit, they have to liquidate excess holding within five days. This could lead to volatility in the stock,” says an analyst.
 

---- Samie Modak
 

Gold ETFs see profit-taking 
 

The sharp rally in gold prices is prompting some investors to book gains. In March, gold-linked exchange-traded funds (ETFs) saw a net outflow of Rs 194 crore, with redemptions seeing a fourfold jump to Rs 438 crore. After such funds logging a one-month gain of 18 per cent, advisors are recommending investors to take some profits in a staggered manner. "The rally in gold prices has amplified the exposure levels to gold-linked ETFs as value of such investments has jumped significantly. Investors can re-balance their portfolios and revert to their asset allocation strategy by trimming gold-linked exposures," said an investment advisor.
 

---- Jash Kriplani