Sunil Subramaniam, MD & CEO of Sundaram Mutual Fund, shared his views on the fundamentals of the market and spoke about specific stocks and sectors.
Speaking about autos and auto ancillaries, Subramaniam said, "It is a wait & watch for auto names during the festive season. “Until the end-user automobiles show a growth, ancillaries are not going to get the order book going. So, at this point in time, we got to see how the festival season pans out."
“While we expect heavy discounting to kind of boost the top line sales of auto companies, that is not good for auto companies’ bottom line. However, it would be good for auto ancillary companies because on the top line of that company their order books will go up. So we will keenly watch the numbers in the festival season for that,” Subramaniam said on Wednesday.
“The government’s room this year is still limited because one, they have taken on this fiscal deficit as a burden. Second is the fact that they have already borrowed most of the money, they do not have much room. However, February 1 is a new budget and it is a new year. What we are observing is that in the next budget we do expect a lot more room for government spending to kickstart. So, budget from February onwards, we think that government spending will start driving and even for the commercial vehicles, auto, everywhere, it is government spending which is going to create a boost,” he said.
“Our sense, first quarter of next year should see some beginning of a revival driven by government spending,” he added.