Tata Motors shares hit one-year low; should investors consider averaging?

Shares of Tata Motors extended their fall for the second straight session on Monday. The stock slipped 3.33 per cent to hit a 52-week low value of Rs 709.40. It eventually settled 2.83 per cent down at Rs 713.15. At this price, it has corrected 36.54 per cent in the past six months.

The scrip saw high trading volume today on BSE as around 7.62 lakh shares changed hands. The figure was higher than the two-week average volume of 5.92 lakh shares. Turnover on the counter came at Rs 54.73 crore, commanding a market capitalisation (m-cap) of Rs 2,62,519.42 crore.

A few analysts suggested that the technical outlook looked 'bleak' for Tata Motors. One of them advised investors to average it at a lower level of around Rs 650. The carmaker is slated to announce its December 2024 quarter (Q3 FY25) earnings on January 29, 2025. 

Market expert Kush Ghodasara advised investors should hold Tata Motors with a long-term view. "There is some pain in the stock price right now but one can hold it with a stop loss of Rs 580. Average the stock around Rs 650 level," he told Business Today. 

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "The technical outlook appears bleak with immediate support seen in the Rs 700-680 range. On the upside, Rs 760 will be a key resistance level. A sustained move above this point could only trigger new long momentum in the stock."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi, said, "Support will be Rs 700 and resistance at Rs 733. A decisive move above Rs 733 level may trigger a further upside towards 750. The expected trading range will be between Rs 690 and Rs 750 for the short-term

Sebi-registered research analyst AR Ramachandran said, "Tata Motors is bearish on daily charts with strong resistance at Rs 754. A daily close below support of Rs 711 could lead to a downward target of Rs 682 in the near term."

The counter traded lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The 14-day relative strength index (RSI) came at 35.06. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The stock has a price-to-equity (P/E) ratio of 28.03 against a price-to-book (P/B) value of 8.57. Earnings per share (EPS) stood at 25.44 with a return on equity (RoE) of 30.57.

As of December 2024, promoters held a 42.58 per cent stake in the company.