Tata Motors, Mahindra & Mahindra, Eicher Motors: How to trade these 3 auto stocks

Indian benchmark indices settled with mild cuts on Monday, extending the weakness for another session. However, the markets staged a smart rebound from day's low. BSE Sensex shed 112.16 points, or 0.15 per cent, to end the session at 73,085.94. NSE's Nifty50 fell merely 5.40 points, or 0.02 per cent, to settle at 22,119.30 for the day.

Some buzzing auto stocks including Tata Motors Ltd, Mahindra & Mahindra Ltd (M&M) and Eicher Motors Ltd are likely to remain under the spotlight of traders for the session today. Here is what Jigar S Patel, Technical Research Analyst at Anand Rathi Shares and Stock Brokers has to say about these stocks ahead of Tuesday's trading session:

Tata Motors | Buying range: Rs 615-625 | Target Price: Rs 720 | Stop Loss: Rs 570

Tata Motors has taken support at the 50 per cent retracement level of its rally from March 2020 to July 2024, aligning with key weekly and quarterly S1 support levels. Additionally, the weekly RSI is in the oversold zone, indicating a potential rebound in the coming sessions. Given these technical factors, a buying opportunity emerges in the Rs 615-625 zone, with an expected target of Rs 720. A stop-loss should be placed below Rs 570 on a daily closing basis to manage risk. This setup suggests a favourable risk-reward ratio, with a bounce likely if the support holds.

Eicher Motors | Breakout above Rs 5,000 | Target Price: Rs 5,300 | Stop Loss: Rs 4,850

Eicher Motors is currently in a no-trade zone without a clear trend. Although the hourly MACD has formed a bullish crossover, price action remains indecisive. A confirmed breakout above Rs 5,000 on a daily closing basis is needed to signal strength. If this level is breached, a long position can be initiated for an upside target of Rs 5,300, while a stop-loss should be placed below Rs 4,850 on a daily close basis. Until then, it is advisable to wait for confirmation to avoid false breakouts and unnecessary risk in the current uncertain market conditions.

Mahindra & Mahindra | Caution

M&M has been in a six-month distribution phase between Rs 3,200 - 2,700 and has now broken a critical support level at Rs 2,650, which is a bearish signal. Currently trading below this level, the stock remains weak. However, if M&M sustains above Rs 2,700 in the coming sessions, it could trigger an upside move towards Rs 3,000. Until then, a wait-and-watch approach is advisable, as failure to reclaim Rs 2,700 may lead to further downside pressure.