Before checking the status of Maruti and Tata Motors, lets check how the Auto sector has been performing in recent months.
The sector itself has corrected more than -40% from its recent peak levels, which depicts the over all trend of auto stocks and it would affect the auto ancillary stocks as well.
When the main auto companies are not doing well, obviously the supplier to these companies will also face the slow down.
Lets look at the historical data and see how the auto stocks performed during the crisis period, have to go way back to 2008–2009 period.
During the bull phase it went up tremendously and I remember the launch of TATA NANO during 2008 Jan was a biggest sentiment booster at that time and stock was trading at all time high.
However, when financial crisis of 2008 started, the auto sector corrected -60%.
When the index itself corrected -60%, the respective stocks corrected even higher during such period. The similar pattern we are witnessing now after 10 years.
The Auto sector corrected -40% so far, if over all market turns bearish, more sell off could be expected with these stocks.
History repeats!
Tata Motors: It is one of the biggest wealth destroyers, from its peak level of Rs.600 it has corrected more than -70% and currently trades around Rs.150. Many retail investors were trapped in it because of the brand TATA.
Maruti: Heading to new 52 week low every time, from its peak level of Rs.10000, it has already corrected -43%. Since many other sector has to witness huge sell off, the fall in Maruti could be even more harder, if the over all market sentiment turns bearish.
YesBank: We all know whats the situation with Yes Bank, its already down -80% from its peak level of Rs.400. Sentiment at its worst now for Yes Bank.
The trend is clear down, there are traders/investors who bet on this stock now, thinking it could turn out to be next HDFC bank.
But seeing the stock trend, i believe it could become next South Indian Bank.
Do not catch the falling knife again, better to stay from all three stocks.