Auto Sector Has Outperformed: We are looking for Buying Opportunities in Maruti Stock

Maruti Suzuki India Ltd. is a leading 4 wheeler automobiles company it was listed on NSE on 9 July 2003 and the stock has given very good returns to the investors, looking forward we see that the performance of the company is very good in the emerging markets like India. It also sell various types of vehicles in automobiles segment. Looking at the stock price chart we find that the price action is now consolidating and we are looking for range trading in this stock so one should establish a support/resistance level and then trade them, like buying at the support and selling at the resistance level. We see that this pattern will continue in this stock unless there is any breakout in either direction. While looking at the monthly charts of MARUTI we see that price action is taking some support near 45 EMA and this can be taken as buying opportunity for the longer term. Our long term recommendation for MARUTI is to buy above 1100 level for target of 1580 and then 1710 levels, it is also recommended to place the stop loss below 1050 level. The above trade setup is an excellent example of risk to reward ratio, Risk is of 50 points and reward is (first target) 480 points. This trade can also be taken on the futures contract and must be rolled over to next month until the targets are met or stop loss is triggered.

Company is fundamentally sound (strong) and we believe that there is much room for its further growth, but in near term we may see some pressure on the margins and low sales due to inflation, petrol price hike, interest rates hike, etc. For longer term we have extremely strong fundamentals for this company.