“I've been doing a lot of fundamental research on Hero Motor Corp (HMCL IN), am extremely bullish on the fundamentals, and would be very interested in your reading of the chart. Thanks.”

Eoin Treacy's view Thank you for this question and I look forward to welcoming you to The Chart Seminar in New York in April. The previous incarnation of the share, Hero Honda Motors, appeared in a list of Asian high yield shares in Comment of the Day on August 19th 2010 and again on September 1st 2010, following an inquiry by a subscriber. Both these pieces are now available in the free public archive.

The termination of the joint venture with Honda means that Hero Motors can now enter the export market which opens up a great deal of growth potential. The share failed to hold the breakout to new highs in November and pulled back into the range. It found support three weeks ago in the region of R1750 and a sustained move below that level would be required to question potential for some additional higher to lateral ranging. A sustained move above R2000 would reassert medium-term demand dominance.

Bajaj Motors is a somewhat largely company focusing on motorcycles and three wheelers. The share has a similar pattern to Hero Motors but has been less volatile and fell less during the decline from the October peak.

The Indian auto sector has been a bellwether for the India stock market. It is therefore encouraging that it has returned to a position of relative strength. (Also see Comment of the Day on January 13th).