Auto stocks: Time for a cool down – and also an opportunity? 6 auto stocks with an upside potential of up to 44%

It is the auto sector that largely drove the market rally in the last three years. With good reason. Historically, rallies led by the transportation and auto sectors are more durable. For, sales of LCVs and certain other auto segments reflect the economic situation on the ground. The flip side? While the mad rush drove up stock prices, it also sharply pushed up valuations. At the same time, the Indian auto sector is going through a transformation and companies are adjusting to it quite well. So we have a situation where the fundamentals are good and improving, but valuations are pricey. In all likelihood we might see some cooling-off – the first signs of which were visible on Thursday. It could be an opportunity for investors who missed the bus and are looking for long-term candidates.