Tata Motors vs Maruti vs M&M: Which auto stock to buy amid RBI’s rate cut buzz?

Stock to buy on Monday: After the US Fed rate cut by 50 bps, the Indian stock market experts predicted the end of the high interest rate regime in the Indian economy as well. They believe the Reserve Bank of India (RBI) may announce an interest rate cut in its upcoming RBI MPC meeting from October 7-9, 2024. They said that rate-sensitive stocks are expected to outperform others and advised investors to buy them before the RBI MPC meeting. As the Indian economy has done exceedingly well in recent quarters, any range but announcement by the Indian central bank is expected to fuel auto stocks and advised buying auto stocks next week.

According to stock market experts, the RBI is expected to announce an interest rate cut after the 50 bps US Fed rate cut. As the market is buzzing with the RBI interest rate cut ahead of the RBI MPC meeting, they advised investors to add or accumulate auto stocks as they are expected to outperform other rate-sensitive stocks. They said that auto stocks may outperform other rate-sensitive segments. The Indian economy has been doing well, and people have a high purchasing power capacity, which may go northward after the RBI's interest rate cut move.

Why should you buy auto stocks?

Pointing towards the possible outcome from the upcoming RBI MPC meeting, Avinash Gorakshkar, Head of Research at Profitmart Securities, said, "The RBI is expected to announce an interest rate cut after the US Fed's easing monetary policy. As the Indian economy has done well in recent quarters, the purchasing power of the Indian consumer is very high, and any interest rate cut may fuel demand in the rate-sensitive sectors like real estate, banking, auto, consumer durable, etc. However, the auto segment is expected to outperform others as the auto segment is expected to perform well when the national economy is doing well." He advised investors to look at Tata Motors, Maruti Suzuki India and Mahindra & Mahindra (M&M).

Tata Motors vs Maruti Suzuki vs M&M

Asked about the technical setup of these three auto shares, Anshul Jain, Head of Research at Lakshimishree Investment & Securities, said, “Tata Motors share seems to be stalling. After a failed breakout from the ₹1,065 to ₹921 range, the stock looks weak and may dip further to ₹921 in the short term. With signs of distribution, Tata Motors share price might miss out on the anticipated rate cut rally.”

"Maruti Suzuki share price is revving up! The stock has broken out of a 26-week-long flat base at ₹13,000, backed by strong volumes and no negative momentum signals. Maruti's chart shows all the signs of a continued upward drive, making it a strong contender in the auto sector," Jain added.

Batting in favour of Mahindra & Mahindra shares ahead of Tata Motors and Maruti Suzuki shares, Anshul Jain said, "Mahindra & Mahindra share has broken free from a 12-week consolidation at ₹3,000 with impressive volume, setting its sights on a near-term target of ₹3,700. M&M is poised for a powerful run, and investors should grab opportunities on any dips."

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.