Tata Motors has been one of the oldest names listed in Auto sector, but in recent times it has not been in the list of favorites for investors. If you are a long term investor and had invested in Tata motors in the year 2013 then you are at par with your capital or just 10% ROI but at the same time if you had invested in the benchmark index then you might have earned around 70% on your investment. So clearly, investor has lost opportunity returns in being invested in Tata Motors.
But what’s next? Should They Exit???…No!
After 2016, JLR sales has slowed down comparatively in US and Europe which was hampering the sales growth of Tata Motors. The reason for this being lack of consumer confidence and lower demand for diesel. JLR sales contribute as much as 65% in absolute terms of total sales of the company on its consolidated balance sheet. So JLR sales has a direct impact on Tata Motors fundamental performance. In the last Quarter, sales of JLR have been picking up again steadily on MoM basis in Europe and US. But now the Asian market contributes approx 27% towards its sales. Now is maybe the right time to be positive on JLR sales in coming quarters.
Looking at the Domestic operations, Tata motors continues to hold pioneer position in Commercial Vehicle sales while Passenger vehicle sales are improving. Tata Motor’s Tigor would be the Game Changer this FY because they have come out with Battery version. They have got order from government for around 10,000 cars. Therefore the Domestic operations are expected to pick up this year.
Now to sum up, the Fundamentals of the company are expected to pick up. So, now let’s have a look at what the charts have to say?
Technically the stock has been trading at the lows of 2013 and also it is around 8 years support trend line on weekly charts. Indicators are oversold on the weekly zone and we have seen sharp short covering last week with heavy volumes which was from the support of the downside trending channel. As a long term investor this is the best time to start accumulating the stock on technical parameters. Maybe we have two resistances at 411 and 450 but once they are breached, we are going to have dream run on the stock. On the downside the support is at 300-314 which could act as stop loss for your investments.
P.S. Fundamentals of the stock looks at attractive valuation while technically the stock has parameters which could give fierce reversal supporting to our fundamental turnaround. So the strategy for investors is to accumulate stock at each dip with SL of 300 while TGTS for short term 411 and 450 but for long term we still have a long way to go!!!!