Tata Motors, Maruti top picks for Macquarie, downgrades Ashok Leyland, Bajaj Auto

Macquarie remains bullish on the auto sector and believes there are 3Ms at play in the auto names, margins, market share and market growth.

The firm believes there is an upside risk to earnings for auto names on the back of market share gains, margin improvement and the fact that commodity prices have cooled off. There is a cyclical recovery in demand which means that there is an upside risk to the earnings for the next couple of years.

Tata Motors, Maruti Suzuki India, Mahindra and Mahindra (M&M) and TVS Motor Company are top picks for Macquarie.