Varun Goel expects the auto sector to grow on the back of monetary easing and anticipated rate cuts, which should boost passenger vehicle and two-wheeler sales. Tractor manufacturers stand to gain from a favorable monsoon, while premium motorcycles and SUVs are benefiting from rising demand for premium products. Goel remains selectively optimistic about the chemical sector, with a preference for specialty chemicals and battery-related segments.
Auto Sector in Top Gear: Varun Goel’s Outlook
The Indian auto sector is riding high on optimism as multiple tailwinds align for growth. Varun Goel, Senior Fund Manager at Mirae Asset Investment Managers, says the outlook for autos — and other cyclical sectors — is improving thanks to significant monetary easing this financial year and expectations of further rate cuts ahead.
“With inflation data remaining benign, we expect more rate cuts going forward. Lower EMIs for home and auto loans should translate into stronger demand for passenger vehicles and two-wheelers,” Goel says.
Nifty Auto was the top sectoral gainer on Tuesday, with Hero MotoCorp outperforming broader market trends. Tesla’s recent entry into India with its new Mumbai showroom has also added fresh excitement to the sector.
Tractor Sales Get Monsoon Boost
A favourable monsoon is expected to support tractor sales, buoyed by strong rural sentiment and healthy farm output. “We like companies in the tractor segment as the monsoon continues to be good,” Goel notes.
Premiumization Trend Drives Growth
Premium motorcycles and SUVs are seeing steady growth as Indian consumers increasingly shift towards aspirational, feature-rich vehicles. “The premiumisation story in the Indian vehicle market continues to play out, and we see this trend sustaining,” Goel adds.
He also highlights that two-wheeler sales should pick up further as the festive season approaches.
Chemical Sector: Selective Optimism
Switching gears to chemicals, Goel says the sector has come out of a challenging three-year downcycle, driven largely by strong supply from China post-Covid, which weighed on volumes and realizations.
“Incrementally, we are more positive on specialty chemicals. We especially like companies focused on battery chemicals, including those creating electrolytes and other battery-related products — it’s a niche theme that should do well. Water treatment and purification chemicals are another interesting space,” he explains.
He points out Rallis India as an example of the positive momentum in this space, with the company recently posting a robust set of results.
Constructive Stance Ahead
Overall, Varun Goel maintains a constructive stance on the auto sector and remains selectively optimistic on the chemical pack. Supportive macro trends, resilient demand, and sector-specific tailwinds are expected to keep the momentum strong in the months ahead.
