Tata Motors share price touched yearly lower during early session today but a recovery was witnessed later and the stock ended the day nearly one percent higher. Tata Motors opened at Rs 678 and touched an intraday low at Rs 667.05 before bouncing to intraday high at Rs 690.70. The stock closed the trading session 0.93 percent higher at Rs 686.95. Tata Motors has declined 37 percent over the last six months and the stock currently looks fairly valued.

Sandip Sabharwal Positive on Tata Motors and Mahindra & Mahindra

Renowned market expert Sandip Sabharwal shared his insights on Tata Motors, highlighting that while some uncertainties persist, the stock has undergone a significant correction. He noted that the steep decline—from ₹1,150 to below ₹700—has created substantial value in the stock, even though its growth trajectory remains less clear compared to other domestically focused companies with strong export presence. Despite this, Sabharwal believes there is a high probability of a recovery and a potential bounce-back in Tata Motors.

Additionally, Sabharwal expressed his bullish stance on Mahindra & Mahindra (M&M), emphasizing that it remains one of his top large-cap holdings. He remains confident in M&M’s robust growth outlook, particularly in the SUV segment, which has driven the company's success. He further pointed out that among Indian auto companies, M&M stands out for its ability to create and scale successful products, reinforcing its position as a leader in the sector.

Key Metrics

HDFC Securities Bullish on Tata Motors

HDFC Securities, issued a target price of ₹750 in early February 2025, citing the company's strong product portfolio, including its electric vehicle (EV) push, as a growth driver. Despite the sharp correction in Tata Motors' stock price, analysts believe the company's potential for recovery remains high, especially with global demand for EVs increasing.

Analysts have also pointed to Tata Motors' successful entry into electric vehicles with models like the Nexon EV and its ongoing commitment to innovation. However, concerns about the overall growth trajectory and potential macroeconomic headwinds continue to weigh on sentiment.

Technical Analysis

Performing a technical analysis on Tata Motors, we can observe several key patterns that indicate possible future movements.

Candlestick Patterns: The daily candlestick chart for Tata Motors reveals a series of doji patterns and bullish engulfing candles that suggest the potential for a short-term reversal. These patterns often signal indecision followed by strong directional movement, providing a glimmer of hope for a bounce-back if the stock holds support near ₹667.00.

Fibonacci Levels: Using Fibonacci retracement levels, we find the following important levels:

38.2% retracement: ₹725.00
50% retracement: ₹803.00
61.8% retracement: ₹880.00
These levels offer possible price targets in the event of a rebound, with the first target at ₹725.00 acting as a key resistance point. If the stock surpasses ₹803.00, it could gain momentum toward its previous highs.

Support and Resistance Levels:

Support: The immediate support lies around ₹667.00, with a psychological level of ₹650.00. These levels will be critical in determining whether the stock can hold its ground and reverse its downtrend.
Resistance: Key resistance levels are at ₹690.70 (the day's high) and the aforementioned Fibonacci levels at ₹725.00 and ₹803.00.

Investment Strategy and Actionable Insights

Tata Motors presents an intriguing opportunity for contrarian investors. The stock's significant correction offers a potential entry point for those willing to bet on a recovery. A buy position could be considered if the stock sustains its support near ₹667.00, with the first target at ₹725.00, followed by the mid-level Fibonacci target at ₹803.00.

Investors should also keep a close eye on the global EV market and Tata Motors' ability to execute its plans for electrification. The company's low valuation, combined with the long-term growth prospects in the EV space, presents an attractive case for holding the stock as part of a diversified portfolio.

Sector Competitors: A Comparison

Tata Motors is not the only player in the Indian automobile industry vying for investor attention. Two of its primary competitors, Mahindra & Mahindra (M&M) and Maruti Suzuki, are also worth considering.

Mahindra & Mahindra has emerged as a leader in the SUV market, with robust demand for its models such as the XUV700. M&M also boasts a strong foothold in the electric vehicle space with its e2o Plus and eVerito models.

Maruti Suzuki remains India’s largest automaker, with consistent performance despite economic headwinds. Maruti's focus on the compact car segment and its expansion into electric vehicles make it a strong contender.

While Tata Motors remains a strong choice within the auto sector, the competition is fierce. Investors may want to balance their portfolios between Tata Motors and its rivals, depending on their risk tolerance and growth expectations.