Tata Motors shares turn oversold on charts, can they bounce back?

Shares of Tata Motors Ltd are trading at their 52-week low, down 47% from their 52 week high amid the ongoing market correction. The stock hit a 52-week high of Rs 1,179.05 on July 30, 2024.  Concerns over JLR's business and weak Q3 earnings have affected the stock in the short term. It has lost 42.25% in six months and fallen 35.21% in a year. Tata Motors stock has now entered the oversold zone, indicating there are more sellers than buyers for the stock. The RSI of Tata Motors stock has fallen to 26.3. RSI of a stock below 30, indicates its oversold on charts.  

In the previous session, Tata Motors slipped to a 52-week low of Rs 618.45 on BSE. Market cap of the Tata Group firm stood at Rs 2.28 lakh crore. The stock ended 4.27% lower at Rs 620.55. 

The stock looks weak in terms of technicals as it is trading below the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages. 

It has a one-year beta of 1.2, indicating very high volatility during the period.

Ameya Ranadive, Chartered Market Technician, CFTe, Sr Technical Analyst, StoxBox advises investors to wait and watch before making any move on the counter. 

"Given the current setup, Tata Motors is in a 'no-trade zone,' where neither strong buy nor sell signals are evident. Traders should wait for a decisive breakout above resistance or further confirmation of support before taking new positions. A 'wait-and-watch' approach is advised for now," said Ranadive. 

Mandar Bhojane, Equity Research Analyst, Choice Broking said, "A breakdown below Rs 650 could open further downside potential toward Rs 620 or lower. Traders should closely monitor price action for any signs of a shift in trend before considering long positions."

Incred Equities has assigned a reduce rating with a price target of Rs 661 to the Tata Motors stock. 

Tata Motors’ consolidated EBITDA in 3QFY25 fell 14% YoY but was up 6% qoq at Rs 155 bn, missing our estimate by 11% and Bloomberg consensus estimate by 3%, said Incred. 

Incred Equities is bearish on the prospects of the firm's overseas arm JLR. 

"With tariff challenges in global trade and volatile currency movement, JLR will be vulnerable, despite its improved product mix and new vehicle launch plans. Increased competition in India’s electric car and small truck segments are a cause of concern. We maintain our REDUCE rating on Tata Motors. Key upside risks: Success of new products and demand stimulus benefits," said Incred Equities.  

However, global brokerage CLSA has given a rating upgrade to the auto stock as it believes an adverse near-term outlook has given scope to enter the counter at favourable valuations. It has assigned an outperform rating to Tata Motors stock with a price target of Rs 930. 

Emkay Global has a target price of Rs 950 on the stock.  Motilal Oswal has a price target of Rs 755 on the auto stock. 

"We expect margin pressure to persist at JLR over FY24-27E, given: weak demand in key regions, rising cost pressure as it invests in demand generation, and EV ramp-up, which is likely to be margin-dilutive. Even in India, both CV and PV businesses are seeing a moderation in demand. For lack of any triggers, we reiterate our Neutral rating with a Dec’26E SoTP-based target of Rs 755," MOFSL said post Tata Motors' Q3 results.