- Thursday - monetary policy announcement will have a symmetric impact on banks and autos
- Friday - union budget is unlikely to give out sops to either autos or banking. However, there is a strong possibility of a fuel price hike and rationalization of diesel pricing in India.
- Fuel price hike will not affect auto stocks too much since its will a one off event
- Diesel price rationalization will kill auto stocks with a tilt towards diesel - i.e. Tata Motors which wholly concentrates on diesel vehicles in both commercial and passenger segments. Other stocks will be hit as well but not to the extent Tata Motors will be.
- In case there is diesel price rationalization, Tata Motors can deliver up to 10% underperformance vis-a-vis other rate sensitives
My bet, Long SBIN short TATA Motors