Shares of Tata Motors breached the key support zone during the correction in the previous session. The stock, one of the widely tracked scrips in the auto sector, hit an intraday low of Rs 375.50 and closed at Rs 384.85 on BSE on December 26. Tata Motors breached the support zone of Rs 390-400 during the day. On December 23 too, the stock ended at Rs 378.30. Tata Motors stock hit an intraday low of Rs 376.70 on the day when Sensex and Nifty crashed amid weak global cues. With the dip, the Tata Motors stock came close to the 52-week low of Rs 366.05 hit on May 12, 2022.
However, shares of Tata Motors were trading 2.46% higher at Rs 394.40 today. They hit an intraday high of Rs 397.2, rising 3.21% on BSE. Tata Motors shares are trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. Market cap of the firm stood at Rs 1.31 lakh crore.
The stock has lost 25.24% from its 52-week high of Rs 528.35 hit on January 18, 2022.
The correction in the stock can be attributed to the economic slowdown, global shortage of semiconductors, weak global markets and Russia-Ukraine war.
The stock breaching its support level might be a signal that the correction phase is over. However, analysts suggest that it might not be a good time to buy after the recent recovery. They advise investors to wait till the stock goes above Rs 400 level. Here’s a look at what brokerages said about the prospects of the stock.
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Osho Krishan, Sr. Analyst – Technical & Derivative Research, Angel One said, “Tata Motors is hovering near the cluster of its major exponential moving average on the daily chart and is hustling to surpass the 200 SMA for quite some time, indicating tentativeness in the stock price. On the technical parameters, the stock has strong support placed near Rs 390 odd levels, that historically has proved its mettle. While on the flip side, the immediate resistance is placed around Rs 440, and a decisive closure above the same could only dictate the next set of rally in the counter.”
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas said,” Tata Motors in its last week’s decline breached the support zone of Rs 390-Rs 400. With the bounce this week, it moved up to test that zone, which is expected to act as a resistance zone as per the principle of role reversal. Unless the stock crosses the Rs 400 mark on a closing basis, it is likely to see downside pressure that can push the stock down to 375-370. If we look at the larger picture, then the stock has been witnessing a multi month consolidation. A dip towards the lower end of the consolidation that is near Rs 370-366 will be buying opportunity as far as outlook for 2023 is concerned. The stock is expected to move up towards the upper end of the consolidation with potential targets at Rs 440 and Rs 490.”
Abhijeet from Tips2trade said, “Tata Motors needs to close above Rs 445 on the weekly charts for a sustained uptrend till Rs 495-520 from a longer-term perspective. Rs 366-376 is a very strong support zone. A weekly close below this level could lead to a sharp fall till Rs 330-305 in 2023. Investors who are holding Tata Motors should keep a strict stop loss of Rs 365.”
Ajit Mishra, VP & senior Technical Analyst, Religare Broking said, “Tata Motors has been trading in a corrective phase for the last one year, after the phenomenal surge while hovering within Rs 370-500 levels. It has recently tested the lower band of the range and seeing a rebound now. We thus believe the downside would remain capped until it breaches Rs 370 levels decisively. The move was almost vertical from March 2020 low i.e. Rs 63.5 levels and it made a high at 536.70 levels in December 2021. To digest such gains, it is usual for stocks to witness consolidation, which could last for months.
After a year-long corrective phase, we expect the stock to resume an uptrend in the coming year. We feel further dip towards the Rs 340-370 zone can be considered as an opportunity to accumulate fresh. On the higher side, Rs 420-450 zone would first act as a hurdle. To resume the uptrend again, it should decisively cross the declining trend line, which currently lies around Rs 480 levels.”
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Apurva Sheth, Head of Market Perspective & Research, Samco Securities said, “As China’s Covid concerns loom large, Tata Motors’ problems are getting bigger. China is one of the key markets for the company’s subsidiary Jaguar Land Rover (accounts for 31% of total revenue in Q2FY23) and the increasing Covid cases are adding woes to the automaker in terms of sales volume and manufacturing. These uncertainties have dragged the stock down. The New Year 2023 will continue bringing challenges for Tata Motors globally until the dark clouds lift. Recovery in important markets like UK and Europe is vital. However, Tata Motors is seen making a remarkable turnaround in the domestic market by leveraging and enhancing its existing portfolio along with new product launches. On the technical front, the stock breached its support of Rs 390 odd levels, which held the stock from sliding for the last 6 months. This crucial level has historically been the automaker’s major demand zone. The bulls have again retested the trend line resistance, however, any decisive closure above Rs 420 will be a good catalyst for a sharp-up move to Rs 450. Nonetheless, if the stock breaches Rs 375, one can expect it to reach Rs 350 levels.”
Japanese brokerage Nomura assigned a buy call on Tata Motors with a target of Rs 520 in the beginning of this month. Tiago EV received 10k 1st day bookings which is big positive for the stock. The brokerage expects Tiago EV to sell 3000 to 5,000 units per month and its overall Tata Motors EV sales to touch 60,000/96,000 in FY23/24F.
“Every 1 per cent market share gain in personal vehicles has potential to add Rs 5000 crore to the company’s market cap,” added Nomura.
