Tata Motors Share Price Experiences Significant Decline

Tata Motors shares have recently seen a significant drop, plunging 17% from their record high levels. In Wednesday’s trading session, the stock dipped below the critical Rs 1,000 mark, falling by 5.83% to set a low of Rs 975.05. This decline marks a total reduction of 17.30% from its all-time high of Rs 1,179.05, which was recorded on July 30, 2024.

The trading volume on the Bombay Stock Exchange (BSE) was notably high, with approximately 10.95 lakh shares traded today. This volume is double the average of 4.23 lakh shares over the past two weeks. The turnover reached Rs 108.14 crore, contributing to a market capitalisation (m-cap) of Rs 3,59,834.89 crore.

Global brokerage firm UBS has maintained a ‘Sell’ rating on Tata Motors, setting a target price of Rs 825 per share. Analysts at UBS indicated that Jaguar Land Rover‘s (JLR) order backlog has decreased below pre-COVID levels, and with incremental bookings lagging behind supply, the financial outlook appears weaker. They also noted that incentives for JLR’s flagship Range Rover model may need to rise from current near-zero levels.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, commented that Tata Motors shares are currently in a consolidation phase following their all-time highs. A concerning issue for automobile original equipment manufacturers (OEMs) is the increasing inventory levels at dealerships, which might negatively impact margins.

Despite these challenges, Tata Motors has been a frontrunner in the electric vehicle (EV) market. The impending IPO of Hyundai Motor India (HMIL) is anticipated to enhance visibility in the OEM sector, allowing for a more comprehensive comparison of valuations. Bathini advises investors with a long-term perspective to hold onto their shares.

Technically, analysts suggest that support levels for Tata Motors are at Rs 975, with further support observed at Rs 960, Rs 950, and Rs 940. Osho Krishan, Senior Research Analyst – Technical & Derivatives at Angel One, noted that the stock has seen a correction in recent sessions, appearing weak on daily charts with the potential to drop towards the Rs 950 level in the near term.

Ravi Singh, Senior Vice-President of Retail Research at Religare Broking, commented that investors might consider buying on dips around Rs 920 with an upside target of Rs 1,000. AR Ramachandran, a Sebi-registered research analyst, reiterated that the stock is bearish but may be slightly oversold, with resistance at Rs 1,035. A daily close below support at Rs 975 could lead to a further decline towards Rs 948.

Rupak De, Senior Technical Analyst at LKP Securities, also indicated a negative trend for the short term. As of September 1, 2024, it was reported that promoters hold a 41.86% stake in Tata Motors.