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    A play on economic growth and transformation: 7 auto stocks from different segments with upside potential of up to 41%

    Synopsis

    Unlike the US and some other western countries, where a separate transportation index is watched very closely, in India we don't have a very popular transportation index. The reason why transportation index numbers are extremely important is because there is enough historical evidence to show that auto industry numbers lead indicators of what is happening in the economy. If one looks at the history of the stock market, the rallies which are led by the transportation and auto sector are more durable rallies. Especially the ones which are led by large commercial vehicles. The reason, sales of LCV and certain other auto segments is an indication of the economic situation on the ground. Demand for large commercial vehicles would only increase when there is higher economic growth as more goods get moved from one place to another when the economy is doing well.

    If one looks at the current phase of the bull run, amongst the first to gain were stocks like Ashok leyland, Tata motors, Eicher motors . There was good enough reason for it, all these companies get a significant part of their sales from either heavy commercial vehicles or light commercial vehicles. As soon as the economic recovery started getting pace post covid the demand for their products saw a spike. Because interest rates were low and 100
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