Tata Motors extends fall, down 5%; possible contra buy at current levels

The management of Tata Motors is hopeful of recovery in auto sales after the recent measures introduced by the government.

A day after falling more than 3 percent, Tata Motors extended its decline on September 4 after the automaker reported a 58 percent decline in domestic passenger vehicle sales in August.

The company sold 7,316 units against 17,351 vehicles in the same month in 2018, Tata Motors said in a statement.

Shares of the global automaker plunged 5 percent intraday trade on Wednesday and were trading near its 52-week low of Rs 106.20.

Tata Motors is already down more than 30 percent in 2019, weighed down poor domestic and JLR sales globally.

Tata Motors commercial vehicles business unit president Girish Wagh said subdued demand sentiment due to poor freight availability, lower freight rates and a slowdown in the economy continued to hamper the demand for commercial vehicles.

“We are looking forward to a positive impact of the recently announced stimulus package by the government,” Wagh said.

After the sharp fall, some analysts feel that it could be a contra buy around Rs 106-108 levels, with a near-term target of Rs 125. The stock has been in the bear grip for months now and touched a multi-year low on August 22 at Rs 106.

“A recovery from Rs 106 will need some consolidation in the range of Rs 110-125 for at least a couple of weeks, breaching of this range on either side will strengthen the directional move.

“On the daily chart, it is still weak but on weekly charts, it is trading in the oversold zone. I would suggest a buy, better when it drops around Rs 106-108 level with a target of Rs 125 in the short term, with a stop loss of Rs 100 in a month’s time.”

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