Tata Investment Corp shares zoom 46% in just 3 sessions; time to book profit?

Shares of Tata Investment Corporation Ltd, a Tata Group investment company, surged in Tuesday's trade to hit their fresh one-year high level. The stock jumped 5.39 per cent to hit a 52-week high of Rs 4,735.20. At this price, the scrip has rallied 45.51 per cent in three straight trading sessions. The multibagger counter has ascended by more than 105 per cent in the last six months.

The strong upward move in the share price came on account of Tata Technologies Ltd's initial public offer (IPO), which will open for subscription on November 22.

Stock exchanges have sought clarification from the company on the stock price movement. Tata Investment, in response, said, We do not have any information or announcements to share with the stock exchanges under Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements) which have a bearing on the price/volume behaviour of our scrip traded."

For the unversed, Tata Tech is a subsidiary of Tata Motors. And, Tata Investment Corp is a promoter group entity in Tata Motors. The IPO would be the first by the Tata Group in nearly two decades.

Apart from Tata Motors, Tata Investment owned stakes in at least six listed Tata firms including Tata Chemicals, Tata Consumer Products Ltd, Trent, Tata Elxsi, Tata Steel and Tata Consultancy Services (TCS).

The price band for Tata Tech IPO has been fixed at Rs 475-Rs 500 per share. Investors willing to apply for the issue could bid for a minimum of 30 shares and multiples of 30 shares thereafter.

The IPO would comprise of an offer for sale (OFS) of up to 60,850,278 shares including sale of up to 46,275,000 shares by Tata Motors Ltd, up to 9,716,853 shares by Alpha TC Holdings and up to 4,858,425 Equity Shares by Tata Capital Growth Fund I.

For Tata Investment, technical analysts largely underscored that investors should book profit at current levels.

"The company, being a promoter group entity of the auto major Tata Motors, is witnessing a strong traction. It has rallied to clock new highs on the back of strong trading volumes. However, after such a stellar rally, one should not become complacent and keep trailing profits with a pragmatic approach. For now, the support seems to be around Rs 4,200, followed by Rs 3,900-3,970 levels," said Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One.

"As the current price action is trading way above all major daily exponential averages, there can be some profit booking in the coming sessions. If one has already bought, then trailing stop loss would be a sensible option," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

Investors should book profits at current levels, AR Ramachandran from Tips2trades suggested.

Tata Investment's counter was trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 83.42. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 84.02 against a price-to-book (P/B) value of 0.97.

The scrip has a one-year beta of 0.2, indicating low volatility.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

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