Both domestic funds and FIIs are accumulating the two stocks over the last few sessions, dealers note. However, no real specific reason has been determined as yet for the accumulation. The market has it that Life Insurance Corporation of India has been active on the Hero Honda stock. Salomon Smith Barney, CL Securities and a few other domestic funds are believed to be active on the overall two wheeler sector.

Market players feel that the arrival of the monsoon has generated hope that sales of two-wheelers in the rural segment will increase . Rural demand is the key driver of sales volumes for two-wheeler companies as the two-wheeler sector derives 60-65% of its revenue growth from rural areas.

For May 2003, Hero Honda recorded a 12.3% jump in vehicle sales to 1,63,579 units. Bajaj Auto recorded an 8.6% rise in motorcycle sales to 87,217 units (80,275 units).

For FY 2002-03 ended 31 March 2003, Bajaj Auto posted a net profit of Rs 538.40 crore (Rs 521.10) on a total turnover of Rs 5,070.50 crore (Rs 4,402.70 crore). Hero Honda's net profit for the year stood at Rs 580.76 crore (Rs 462.39 crore) on total income of Rs 5,194.55 crore (Rs 4,539.49 crore).