There is a strong recovery in passenger vehicle segment with 16% y-y volume growth - Maruti's volumes increased by 27% while volumes for rest of the industry grew by 7%. MHCV industry volumes increased by 28%; all three big OEMs have seen strong double-digit volume growth.

On the other hand, domestic 2-wheeler industry volumes remained largely flattish in April - HMSI's volumes grew by 9% while HMCL's volumes were down 7% and Bajaj Auto's volumes were down 4%. In the tractors segment, M&M reported 13% y-y decline, much better than our estimate of 42% decline, while Escorts' volumes remained quite weak and declined by 29% y-y.

April volumes indicate SAAR of 19% y-y growth in MHCVs in FY16F, 10%+ growth in PVs and only 2% growth in 2-wheelers.

'Overall, these numbers validate the trend that we have been expecting of a strong recovery in four wheelers and slowdown in two-wheelers,'' Nomura Financial Advisory and Securities said.

''Rural slowdown and unseasonal rains could lead to weaker-than-expected growth in two wheelers and tractors in FY16F,' Nomura opined. 

Nomura's top picks in the sector are Maruti (MSIL IN, Buy), Eicher Motors (EIM IN, Buy), Ashok Leyland (AL IN, Buy) and Tata Motors (TTMT IN, Buy).

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