Auto sector stocks have been out-performing Nifty index which could be clearly measured from NSE Auto index which has almost given 300% return from 2012 lows against approx 75% return on Nifty index in same period. Stocks such as Eicher, Maruti, Ashok ley and TVS Motor has given tremendous returns. One Stock which should on the list but couldnt secure place due to volatile sales Unit is Tata Motors. So what should a Investor do next if he holds? Or what if a investor wants to invest at current levels? …Lets Look at some factors to answer both questions…
Domestic Sales Trend
Tata Motors is into Passenger Vehicles and Commercial Vehicles segment in India which as a sector has seen a good growth. Company’s share in Commercial vehicles is still a healthy one and its going at steady pace but Passenger vehicles market share was shrinking as they didnt have compatible models to fight against competitors. But recent launches HEXA and NIXON could give a tough fight as they have some JLR technology but at an Indian Price. Another game changer could be Tata Tiago’s EV version which is a move to drive Governments goal of developing Electric Vehicle market by 2030. As per my knowledge Tata Tiago could run 150 km at one charge which is compatible with existing models of competitors. Even company has recently won some government orders to supply Electric vehicle which could be helping Domestic sales.
Above graph is Company’s Auto sales number and we could notice that recent past has been in increasing trend which is almost at 8 years high. So company is doing fairly good at Domestic sales level and has favoring conditions to grow in coming quarters.
JLR brand gets almost 80% of Company’s revenue in absolute terms and profits are directly related to this segment’s performance. Brand had many hiccups in the sales performance globally which is the reason why company hasnt been performing well till now. Sales in Europe and US had dipped in last 3 quarters which is now expected to rise after ECB is continuing with QE and US may come with big tax cuts in November.
Though JLR sales is down almost 40% from 2016 highs but still it is on increasing trend since last 8 years. A small positive jump on Auto sales and stock is expected to cover up all lost ground.
Now lets look at Technical Charts
Tata Motors has been in range bound movement since last 2 months which is why i have gone to weekly chart to catch up with some long term support. Interestingly i found that stock has just taken support at 9 year Support trend line which means its at the best time and price to accumulate stock for strong reversal. As you would notice upside trending WHITE support line which is currently around 390 levels which could be taken as a Stop loss. Considering Weekly RSI indicator and MACD indicator , they have given a positive crossover signaling a buy on the stock. But to confirm a positive reversal, safe investors can watch for 440 level on upside which is a breakout from a currently down trending BLUE channel.
To sum up, Tata Motors has been under-performing ,its peers and index ,as Sales number for Company had been sub-dued. Now as we can notice sales has been reversing since quite some time which is yet not discounted in the Stock price so we are technically looking for a entry in the stock. Reading the charts has revealed that a move above 440 could ignite a new long term rally on the stock. So strategy for investors would be accumulating at each dip with sl of 385 while short term traders can buy above 440 for the medium term tgts of 560/600.
Have a safe drive and read disclaimer before driving stock on our recommendation.
Nifty had been volatile in the strict range since few months between 9700-10150 but in such course it was giving a perfect corrective Wave which was proved this week. In my last post we did study two cases where we expected either sharp downside or rally, and now our fortune is decided.
So now as you can notice in the chart, Nifty had two possibilities of going to either 9400 or 10700 which all depended on whether it is resisting near to 10060 or not! Yesterdays close above 10060 has given a fresh breakout on weekly charts and now we can be rest assured that we are positional inching to new limits for the skyline. Though the rally wont be easily as it was in the start of the year but with some hiccups on the way.
Technically speaking, lastly marked 9700 was an end to a corrective pattern and new Motive Wave has been initiated since then. So now technical support range for long trade would be in the range of 9700-9800 where 9860 could be a stop loss for all long trades as of now. Indicators are though overbought in weekly charts but have got enough correction in recent past to make a new strong move. Wave count makes a recent small tgt of 10700 with sl at 9860 on Nifty weekly chart. Stop loss at 9860 gets more relevance as its even 20 Weekly SMA which has acted as significant support since the start of this calendar year rally.
Strategy for Traders: Buy Nifty on each dip with tgts of 10700 and Stop loss 9860
Strategy for Investors: Park your liquidity in Pharma stocks and Pvt sector stocks for long term investment in next 2 weeks and wait for fruit to ripe in two years. For stock recommendation look out for our app!
Nifty has completed short covering which i mentioned in my last post and targets of 9980 were achieved on Friday. But now what next?
Technically speaking we should now trade after getting closer to 10050-10060…But can GST Simplified announcement fuel the rally ??…Lets look at the chart
May be you might be confused looking at the charts, but let me explain you in simple words. When we last crossed 9000 in March, we gave a breakout to Inverse H&S pattern which gave a target of 10600-10800 for a long term bet which is yet active which suggest that we are surely in a long term bull run and we should get there once before crossing down 9000 anytime in future. Now when we consider Wave Theory to predict further trend we are getting two probabilities …First is that a dip to 9700 was a Corrective WAVE A of larger trend , which means recent short covering is WAVE B which can resist in the range of 9980-10060 and resume slide down to 9400. Second is that a dip to 9700 was the end of Corrective Wave 4 of a motive wave which means we are into Wave 5 of the larger trend which could get upto 10700 which is coinciding near to Inverted H&S. But remember BOTH POSSIBILITIES HAVE EQUAL CHANCES!
Now looking at the Derivative open interest , currently we are having a resistance at 10000 which is making us little bit biased on the short selling in next week but for the bulls we got a GST Simplified Announcement post market hours on Friday which could break that resistance on Monday opening. Now Talking about Moving averages , we have closed above 20 DSMA 9965 which was acting as a strong resistance on daily chart and on weekly chart we have taken strong support on 20 weeks Average which is acting as support since start of the year.
So to recommend a strategy to my readers, i would suggest going stock specific longs on monday in sectors such as PSU Banks and Pharma which are looking to outperform on charts in coming weeks. Also Earning season kick starts next week so that could be in focus. On the otherside for index trading, i would recommend not to trade this 100 points (9980-10080) as it could be quite volatile. To get a confirmed trade, we need to close above 10060 for longs and close below 9910 before crossing 10000 next week for shorts. So its better to avoid index trading and rather stick to stock specific trading.
Happy Weekend Guys and will keep you posted as soon as we get some clear trade on Index!