The Nifty Auto index outperformed Nifty50 between March-July'22.
When broader markets were correcting, the auto index hit new all-time high.
In the market reversal from ~15,200 to 17,800 for the Nifty50, some of the index heavyweight stocks witnessed short-covering rally.
This boosted the Nifty50 and it outperformed against the Nifty Auto index in August 2022.
As auto index is trending close to its all-time high after the breakout from multiple resistance levels (marked green on the chart).
The index has broken out from the breather in the form of a wedge pattern (black dotted lines on the chart).
The bulls are in control of the trend. The Nifty50 is heading to 18,000. This indicates the outperformance will continue. It's just a matter of time.
Constituents of Auto Index:
As the auto index outperforms and stock markets recover, the auto index may breakout towards new all-time highs.
There are other reasons too apart from the technical ones which could trigger the next leg of growth for auto stocks. Read our editorial on why auto stocks are rising.
At present, the auto index is trading higher by 1.7% at 13,140 levels.
From the index, Eicher Motors, Apollo Tyres, and Motherson Sumi are leading the gainers.
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Brijesh Bhatia Research Analyst and expert chartist, is the editor of Alpha Wave Profits. Fully committed to his craft, Brijesh has mastered the art of making money by trading using technical analysis. Brijesh has an MBA from ICFAI and 16 years of experience in India's financial markets. He began his career on Dalal Street as commodities dealer and it wasn't long before he developed his own unique trading system. Brijesh worked on his trading system until it could be expected to deliver 5 units of return for every unit of risk.
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