Best Auto Stocks to Watch After August 2026 Sales: Nomura and Motilal Oswal Picks Explained

India’s automobile sector delivered a strong performance in August 2026, with passenger vehicles, two-wheelers and commercial vehicles recording healthy growth. Yet the stock market reaction was surprisingly cautious. Several auto shares declined even as manufacturers reported strong monthly sales, highlighting an important lesson for investors: good sales numbers do not automatically mean a stock is a good buy at any price.

According to the latest brokerage views, Mahindra & Mahindra, TVS Motor, Maruti Suzuki, Tata Motors’ commercial vehicle business and several auto-component companies have emerged as names worth watching. Nomura and Motilal Oswal have, however, taken slightly different approaches when selecting their preferred stocks.

The August numbers also provide clues about where India's automobile market could be heading during the important festive season and the second half of FY27.

August Auto Sales Show Strong Demand

The Indian passenger vehicle market recorded a particularly strong August. Industry estimates put total sales of cars, SUVs and vans at around 4.48 lakh units, approximately 36% higher than the 3.30 lakh units sold in August of the previous year. Automakers also increased dispatches ahead of the festive period, anticipating stronger showroom demand.

Among individual manufacturers, Maruti Suzuki sold nearly 1.77 lakh vehicles in August and crossed the one-million-unit sales milestone within the first five months of FY27.

Tata Motors' passenger vehicle volumes increased 59%, while Mahindra & Mahindra recorded 50% growth. Hyundai Motor India also achieved its highest-ever domestic sales for the month of August.

The two-wheeler market remained healthy as well. TVS Motor reported an 18% increase in August sales to 4.34 lakh units, while Bajaj Auto's local motorcycle sales rose 10% to 2.02 lakh units. Royal Enfield, the premium motorcycle brand of Eicher Motors, recorded 11% growth.

These figures suggest that consumer demand remains supportive across several important parts of the automobile industry.

Why Did Auto Stocks Fall Despite Strong Sales?

One of the most interesting aspects of the August sales update was the market reaction.

Auto stocks declined even though monthly volumes were strong. Hero MotoCorp fell around 5%, Eicher Motors declined more than 4%, while Bajaj Auto, Mahindra & Mahindra and TVS Motor also traded lower. Maruti Suzuki and Tata Motors' passenger vehicle shares were down by nearly 1% at one point, while the Nifty Auto index declined more than 2% during the morning session.

This disconnect between operating performance and share prices can happen for several reasons.

First, investors often look beyond a single month's sales number. They want to know whether the growth can continue.

Second, the second half of FY27 will face a higher comparison base. That means maintaining the same percentage growth could become more difficult.

Third, analysts are watching the possibility of additional price increases. Higher vehicle prices could eventually affect affordability, particularly in mass-market categories. Inflation and interest rates are also important variables for automobile demand because many vehicle purchases are financed.

Therefore, strong August sales should be viewed as a positive indicator rather than a guarantee of future stock returns.

Nomura's Preferred Auto Stocks

Nomura remains positive on selected automobile companies but expects industry growth to moderate as FY27 progresses.

The brokerage believes companies exposed to electric vehicles and new product launches could have an advantage as the automobile market evolves. Nomura also highlighted logistical challenges affecting some manufacturers, particularly in exports.

Its preferred names include:

• Mahindra & Mahindra
• Hyundai Motor India
• Tata Motors' commercial vehicle business
• TVS Motor
• Sona Comstar

Mahindra & Mahindra

Mahindra & Mahindra stands out because of its strong performance in passenger vehicles and its positioning across multiple automobile categories.

The company recorded 50% growth in domestic passenger vehicle sales in August. Its SUV portfolio remains an important part of the company's growth story.

Nomura also pointed toward the increasing importance of EVs. Models such as the XUV 9S were cited as examples of strong demand, with the brokerage noting a waiting period of around three months for the model.

For investors, the combination of SUV demand, new launches and EV exposure makes M&M one of the more closely watched stocks in the sector.

TVS Motor

TVS Motor is another company receiving support from brokerage analysts.

Its August sales increased 18% to 4.34 lakh units. The company has exposure to motorcycles, scooters and electric mobility, giving it multiple avenues for growth.

The two-wheeler market is particularly important because it has a broad consumer base and can benefit when household mobility demand improves.

Motilal Oswal also included TVS Motor among its top OEM picks, giving the company support from both brokerage perspectives.

Tata Motors

Tata Motors' passenger vehicle business delivered one of the strongest growth rates among major manufacturers in August, with volumes increasing 59%.

Nomura's preferred exposure, however, is specifically to Tata Motors' commercial vehicle business.

Commercial vehicles are closely linked to economic activity, transportation demand, infrastructure spending and fleet replacement. Stronger commercial vehicle dispatches can therefore provide an additional growth opportunity beyond passenger cars.

Motilal Oswal also highlighted Tata Motors' commercial vehicle performance, noting that it continued to outperform peers.

Hyundai Motor India

Hyundai also finds a place among Nomura's preferred stocks.

The company recorded its highest-ever domestic August sales, showing that its product range continues to attract buyers despite intense competition in India's passenger vehicle market.

However, investors should remember that strong sales growth needs to translate into sustainable earnings and cash flows before it can justify a higher valuation.

Sona Comstar

Sona Comstar represents a different part of the automobile investment theme.

Rather than being a vehicle manufacturer, it operates in the auto-component space. Its inclusion in Nomura's preferred list highlights the growing importance of component suppliers as automobile technology changes.

The transition toward electric vehicles can alter the mix of components used in vehicles, creating opportunities for companies positioned in relevant technology areas.

Motilal Oswal's Top Auto Picks

Motilal Oswal also sees continued strength in the automobile sector.

The brokerage highlighted encouraging retail demand across most segments, while tractor growth moderated. It also noted strong wholesales in passenger vehicles, commercial vehicles and two-wheelers.

Its top OEM picks are:

• Maruti Suzuki
• TVS Motor
• Mahindra & Mahindra

Among auto-component companies, its preferred names are Motherson Sumi Wiring India, Samvardhana Motherson International and Endurance.

Maruti Suzuki

Maruti Suzuki remains an important company to watch because of its scale and dominant position in India's passenger vehicle market.

The company crossed one million total sales during the first five months of FY27 and sold nearly 1.77 lakh vehicles in August.

Its size provides significant operating leverage when industry volumes increase. At the same time, investors need to monitor competition, product launches, pricing and the company's ability to maintain growth as the market becomes more competitive.

EVs Could Become a Bigger Investment Theme

Electric vehicles are becoming increasingly important to the Indian automobile industry.

Nomura believes EV penetration is approaching an important turning point and suggested that underlying demand could be higher than reported sales because supply is taking time to catch up.

The brokerage highlighted waiting periods for products including the Tata Punch EV and Mahindra XUV 9S, along with Ather electric two-wheelers.

For investors, this is significant because EV growth can create winners beyond traditional automobile manufacturers.

Auto-component suppliers, battery-related businesses, electronics companies and companies providing specialised drivetrain components could all benefit from the transition.

However, EV investing also carries risks. Technology changes rapidly, competition can be intense and companies may need substantial investment to develop new products.

What About Tractor Stocks?

The tractor segment was the notable exception to the broader strength in August.

While tractor sales continued to grow, the pace moderated compared with other vehicle categories. Motilal Oswal noted that tractor growth had slowed as the comparison base became tougher.

This does not necessarily mean that the tractor industry is entering a prolonged downturn. Instead, it suggests that investors should differentiate between segments rather than assuming that the entire automobile sector is moving at the same speed.

Factors such as rural income, agricultural activity, rainfall, crop prices and replacement demand can influence tractor purchases.

Key Risks Investors Should Watch

Strong monthly sales do not eliminate risks.

1. Higher Vehicle Prices

If manufacturers increase prices further, affordability could become an issue, particularly for entry-level and mass-market customers.

2. High Base Effect

The second half of FY27 will face tougher comparisons. Growth rates could therefore moderate even if absolute sales remain healthy.

3. Interest Rates and Inflation

Automobiles are often financed through loans. Higher borrowing costs can influence purchasing decisions, while inflation can reduce disposable income.

4. Competition

India's auto market is becoming increasingly competitive. New launches, aggressive pricing and rapid EV adoption can change market shares quickly.

5. Supply and Logistics

Brokerages have highlighted logistical constraints in certain areas. Export disruptions and supply issues can affect production and deliveries.

What August Sales Mean for Investors

The bigger takeaway from August is not simply which stock sold the most vehicles.

Investors should look for companies combining volume growth, strong product portfolios, new launches, EV exposure and healthy profitability.

Mahindra & Mahindra and TVS Motor stand out because both appear in the preferred lists of Nomura and Motilal Oswal. Maruti Suzuki receives strong support from Motilal Oswal, while Nomura favours Hyundai Motor India, Tata Motors' commercial vehicle business and Sona Comstar as well.

The fact that auto shares fell despite strong sales is also a useful reminder that stock prices reflect expectations about the future rather than simply current operating numbers.

FAQs

Which auto stocks are preferred by Nomura?

Nomura's preferred automobile names include Mahindra & Mahindra, Hyundai Motor India, Tata Motors' commercial vehicle business, TVS Motor and Sona Comstar.

Which auto stocks are Motilal Oswal's top picks?

Motilal Oswal named Maruti Suzuki, TVS Motor and Mahindra & Mahindra as its top OEM picks. Its preferred auto-component companies include Motherson Sumi Wiring India, Samvardhana Motherson International and Endurance.

Which auto segment performed strongly in August?

Passenger vehicles, commercial vehicles and two-wheelers recorded strong growth, while tractor growth was comparatively slower.

Is strong August sales growth enough to buy an auto stock?

Not necessarily. Investors should also consider valuation, earnings prospects, competition, debt, margins, product launches and future demand before making an investment decision.

Why are auto stocks falling despite strong sales?

Share prices reflect future expectations. Concerns about higher prices, inflation, interest rates, a tougher comparison base and the sustainability of current growth can weigh on investor sentiment even when monthly sales are strong.

Are EVs important for India's auto stocks?

Yes. Brokerage commentary indicates that EV adoption is becoming an increasingly important growth theme, particularly for manufacturers and component suppliers with competitive EV products or technology exposure.

Conclusion

August 2026 has provided an encouraging snapshot of India's automobile industry. Passenger vehicles, two-wheelers and commercial vehicles delivered strong numbers, while the upcoming festive season could provide another important demand catalyst.

But the stock market's reaction shows why investors need to look beyond headline sales growth. The next phase will depend on whether manufacturers can maintain volumes, manage pricing, control costs and successfully introduce new products.

Mahindra & Mahindra and TVS Motor have emerged as notable names supported by both Nomura and Motilal Oswal, while Maruti Suzuki, Hyundai Motor India, Tata Motors' commercial vehicle business and selected auto-component companies also feature prominently in brokerage preferences.

For investors, the most sensible approach is to treat brokerage recommendations as research inputs rather than automatic buy signals. Valuation, business quality, financial performance and individual risk tolerance should remain central to any investment decision.

Disclaimer: This article is for informational and educational purposes only. It is not investment advice, a recommendation to buy or sell any security, or a guarantee of future returns. Investors should conduct their own research or consult a qualified financial professional before making investment decisions.