Tata Motors stock may be overbought, says analysts

Tata Motors stock may be overbought, says analysts

Tata Motors' shares climbed 42 per cent on a year-to-date YTD basis. The stock had a net gain of 0.46 percent on Friday to reach 562.20, a net gain of just 2.48 percent from its previous 52-week high of 576.50. The BSE shares exchanged hands today on the BSE, which was lower than the two-week average volume of 8.26 lakh shares. With a market capitalization m-cap of 1,86, 730.47 crore, turnover at the counter was Rs 26.76.

If we were to go by technical analyst views, the stock may face resistance near its one-year high level around Rs 577 and Rs 600 in the near term, breaching which, it may hit as high as Rs 620. Analysts see an immediate support level of Rs. 545 at the end of the month. If the counter fails to hold this level, it would open a door for Rs 508.

Jigar S Patel, senior technical research analyst at Anand Rathi Shares and Stock Brokers, said Tata Motors may be looking lucrative due to recent up moves in the counter. One has to observe that it is currently approaching its historical resistance of Rs.600. The company said it has already given 50 per cent returns in last five months. It is the way above the 200-DEMA daily exponential moving average, which comes near Rs 453. So, mean reversion could be possible if it is rejected from its above-mentioned resistance zone. In range of Rs. 590 - 600, one can book profit in the range of Rs. 590 - 600. As of now, no fresh longs are recommended. After a decent run, the stock has taken a breather near Rs 573 - 577 zone, and I can expect a short dip with profit booking with the near-term support visible near Rs 545 levels, said Vaishali Parekh, vice president of technical research at Prabhudas Lilladher. The overall trend is positive and only a significant breach below Rs. 545 would slightly weaken the bias and could anticipate a further slide. Currently, one can stay invested and expect that a decisive breach above the peak level of Rs 577 may indicate a breakout for the next targets of 610 - 620 levels. Tata Motors is overbought and looks bearish on the daily charts with strong resistance at Rs 577. Investors should be preparing for a dip near Rs 508 to invest for better returns in the future. On technical setup, the stock traded above 50- and 200 DMA Day moving average, which indicates strong bullishness, said Ravi Singh, Share India's vice-president and head of research. It is expected to hit the target of Rs. 580 in the near future. The stock traded higher than the 500-day, 20-day, 50-day, 100-day and 200-day moving averages. The counter's relative strength index RSI came at 72.06. A value above 70 is considered overbought, while a level below 30 is considered oversold. The company's stock has a P-E ratio of 68.13. The scrip has an average target price of 603, Trendlyne data showed, suggesting a potential upside of 7.33 per cent. It has a one-year beta of 1.23, which indicates high volatility on the counter.

India's equity benchmarks were also extended for the second time this session, as investors extended their losses for the second straight session. Consumers, technology, metal, state-owned lenders, automobiles and energy stocks were all dragged away by the domestic indices.

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