Technical analysts said that Tata Motors is not out of the woods yet even though the company posted decent sales figures in October.

What Happened: Tata Motors’ October sales figure came in at 82,682 units, almost flat compared with the 82,954 units in the previous year. However, the figures surpassed the analyst expectations, which pegged the figure between 78,400 and 79,500 units.

Tata Motors’ stock has risen 1.72% since the figures came, clawing back some losses as the scrip has declined 26% since its all-time high in July.

Technical View: Analysts flagged weakness in Tata Motors’ stock due to a lack of aggressive buying and the share price going below important trendlines on technical charts, indicating further bearishness.

Jigar S Patel, senior manager – technical research analyst, Anand Rathi Shares and Stock Brokers said, “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. Additionally, a bearish divergence has appeared, further confirming a potential downward trend.”

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“More critically, a long-standing four-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 ₹780 and resistance near ₹900. 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,” Patel added.

Anshul Jain, head of research at Lakshmishree said that Tata Motors had hit his previous target of ₹850 and is on course to hit the next target of ₹771. “Despite positive auto sales numbers, the stock’s soft and negative reaction indicates a lack of aggressive buying, giving bears an upper hand. Consequently, I expect Tata Motors to test the ₹771 level within the next 2 to 3 weeks. Investors should stay cautious and monitor the situation closely as bearish trends appear to persist.” Jain noted.

Price Action: Shares of Tata Motors were up 0.52% to ₹828.40 on Tuesday.

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