Technical analysts believe Tata Motors’ troubles are far from over and see more correction for the stock.

What Happened: Tata Motors shares have fallen 21% since its highs in July. The company has been marred with a 15% decline in total sales in September.

Though JLR UK sales have fared better, it has failed to arrest the slide in the stock. On Tuesday, the company won an order to supply 1,000 units of the Tata LPO 1618 diesel bus chassis to the Uttar Pradesh State Road Transport Corporation (UPSRTC).

Technical Views: Technical analysts expects the stock to continue its weakness as recent selling has been backed with strong volumes. Jigar S Patel – technical research analyst, Anand Rathi Shares and Stock Brokers said its better for investors to book profit and advised caution on the stock.

“Tata Motors has experienced a significant decline of 12.3% last month & 9.5 % in current month, raising concerns about its technical position. From an indicator perspective, the Directional Movement Index (DMI) on the monthly chart is signalling caution. The ADX line, which measures trend strength, is notably higher than both the positive and negative DMI lines, suggesting a potential shift in momentum.” Patel added.

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The analyst further added, “Additionally, a bearish divergence has appeared, further confirming a potential downward trend. More critically, a long-standing 4-year bull trendline has been violated on the monthly chart, indicating the possibility of further weakness. As we move forward, it is advisable to book profits on any decent bounce from here on, with support anticipated around ₹850 and resistance near ₹980. Given the technical indicators pointing towards a potential top formation, a correction could be expected in the next 1-2 months. Caution is warranted when dealing with Tata Motors in the near term.”

Anshul Jain, head of research at Lakshmishree said, “Tata Motors, after two failed attempts to break above ₹1,065, has now breached the critical support level at ₹921, indicating a strong bearish sentiment. The stock is on track to test its next key levels, with swing lows at ₹850 and a highly probable target around ₹771. The high trading volumes accompanying the recent downtrend suggest that the stock is under significant distribution. This growing selling pressure highlights a cautious outlook for investors. As Tata Motors struggles to regain momentum, all eyes are on these crucial levels for potential recovery or further downside risk.”

Price Action: On Wednesday, Tata Motors shares were up 0.19% to ₹881.15.

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