Tata Motors Spinoff: Shares Can Potentially Recover Another 27%; suggestion table | Market news | Trending Viral hub


Shares of Tata Motors rose over 5 per cent to a fresh all-time high of Rs 1,035 in intraday trade on Tuesday after the auto major announced the demerger of its commercial vehicles and passenger vehicles.

With today’s strong gain, the stock is up 32 per cent so far this calendar year and is up a whopping 145 per cent so far in FY24 fiscal year. The buying has been so aggressive over the counter that Tata Motors shares have finished with gains in 9 of the 11 months so far this year.

The board of directors of Tata Motors Ltd (TML) on Monday after market hours approved a proposal to demerge the automaker into two separate listed companies. One entity will house the commercial vehicle (CV) business and its related investments, while the other will encompass the passenger vehicle (PV) businesses, including home photovoltaics, electric vehicles (EV), Jaguar Land Rover (JLR) and their related investments. .

Brokerages believe the spinoff appears to be a step in the right direction. However, they remain cautious when revising the target price, given the sharp increase on the counter. READ MORE

Apart from that, the automaker, along with Mahindra & Mahindra and Ola Electric, will receive another round of incentives as they take the lead in earning benefits under the government’s production-linked incentive (PLI) scheme.

These three companies were receiving subsidies under the ongoing Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India) scheme, valid until this month.

According to officials, all eligible businesses benefit from both auto PLI incentives and FAME-II incentives. “Eligible entities will receive incentives from the automatic PLI, and if these entities are already receiving FAME benefits, they will continue to receive incentives until March 2024,” an official said. READ MORE

In this context, here is what the stock looks like on the chart.

Tata Motors

Current price: Rs 1,025

Improvement potential: 26.8%

Resistance: 1,070 rupees; 1,160 rupees

Support: Rs 975

The stock is trading higher on multiple time frames, with key momentum in the fairly overbought zone on medium and long-term charts. However, the directional index is still in ascending mode on both the weekly and monthly charts, suggesting that any dip on the counter could attract aggressive buyers at lower levels.

Going by the long-term charts, the stock’s bullish bias is likely to remain intact as long as the stock remains above the Rs 975 level. As per the daily chart, short-term support for the stock has risen to Rs 1,010 levels. CLICK HERE TO SEE THE GRAPH

The one-year Fibonacci chart suggests that Tata Motors can potentially rally towards Rs 1,300 on the upside, with tentative resistance around Rs 1,070 and Rs 1,160.

On the other hand, in case of sustained trading below Rs 975, the yearly close of Rs 950 could act as an immediate support, below which the stock could fall to Rs 830 levels.

First published: March 5, 2024 | 10:00 AM IS


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