Once upon a time, Tata motor is a darling stock for Investors. The brand and reputation of the business combined with strong balance sheet made the stock a solid bet in 2014 – 2016. Fast forward 2 years, now share prices are trading somewhere close to 185 – 200 levels. Since the beginning of 2017 till to date, Tata motors have tumbled almost 65% from its peak value of 575! Few years back many investors and speculators from my close circle, jumped into Tata motors only by looking at brand, market capitalization and other fundamental variables. They completely ignored market sentiment and Technical factors, now they realize why Price action and Sentiment analysis is important.
Tata Motor Share prices in Long term Downtrend on Weekly Chart
Here’s the Weekly chart of Tata motors with an illustrative Price action analysis, shedding some light over the stock’s journey from 575 to 185. It all began in August 2016; Share prices reached the peak value of 575. Many valuation limits suggested over valued stock price back then, but still many uninformed market participants bought Tata motors at inflated price. Later from Jan 2017 onwards, Buying interest progressively declined in the stock. At this point, Smart players might have completely exited from the market, leaving the shares with vulnerable weak hands.
Selling pressure drastically increased from the start of 2018, with recent market panic and negative sentiment further reinforced the selloff. As a result, we can see strong liquidity pressure in Price action which indicates oversold market conditions. If you’re a contrarian trader, it makes sense to keep this stock on your watch list. But also keep in mind that other factors like general market sentiment, risk management and price action setups should be taken into consideration before taking any trades.
