Today's Opening - 249
Today's High - 250
Today's Low - 243
Today's Closing - 249
Yet another negative closing today, with 13% higher volume than the previous 30 days' average. Starting 25th June, the 14-day Negative Directional Index has been stronger than the Positive Directional Index.
The 2-day Relative Strength Index has remained between 30 and 50 since 17th July. The 12, 26-day Moving Average Convergence Divergence (MACD) has been negative from 24th Jan onwards. Though MACD has recovered since 19th July, it's still negative.
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| Tata Motors-14-Day Directional Indices Trend for 90 Days |
The stock has been negative on the 20-day Commodity Channel Index (CCI) since 16th April. Though the CCI dropped sharply during 16-20th July, it has managed to stay above -100 since 23th July.
The stock has remained below the 5-day Exponential Moving Average since 2nd Aug.
Latest Happenings:
During the recently concluded June quarter, Tata Motors slipped into the red for the first time in three years on a quarterly basis.
Tata Motors is facing multiple challenges. The nearing deadline for Bharat Stage VI (BV-VI) adoption will pose the single biggest challenge for every automobile maker as costs will have to be kept to the bare minimum for sustainable business operation. As for commercial vehicles, the rise is expected to be pretty steep, something that will be difficult to convince the new buyers for.
Coming to JLR, the global JLR sales in July were down by 22%. China alone was down by 46.9%, reflecting continued market volatility in the first month of the duty change as well as trade tensions. In Europe, JLR sales were down by 27% in July and UK sales were down by 18%, impacted by the industry-wide issue of delays in WLTP (Worldwide Harmonised Light Vehicle Test Procedure) certification of 2019 model year vehicles.
The Ministry of Road Transport and Highways announced last month that the trucks that are more than 16 tonne be allowed to carry 15-20 percent more weight than normal. There is confusion on whether the new norms would encompass the existing vehicles that are running on the roads of only those which are yet to be sold or both. With an increase of 20 percent in carrying capacity, a truck fleet operator can manage with fewer trucks than earlier thought necessary. While this could be a temporary impact and might reverse later due to intrinsic demand, but it's hitting Tata Motors at the wrong time.
Tata Motors has entered the electric bus segment but it won't be easy as Volvo is the leading player globally when it comes to electric mobility, including hybrids. Volvo was the first one to introduce hybrids in India and the buses are already in use in Mumbai.
Outlook:
In my post on 4th July, when Tata Motors was at 267, I had mentioned that the stock might show a minor bounce back and then go down to 250. The stock did hit 277 on 9th July and is now at 249. The stock has already lost more than 25% over the past three months and is trending to go down to 200. Keep accumulating the stock on every dip with a long-term view.
If you find this analysis useful, you might also want to read through my latest posts on Bajaj Auto, NTPC and Hero MotoCorp.
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