Tata Motors stock has been on complete Up down journey for quite some time now. It has become odd even kind of move for the stock i.e. one year it delivers a strong rally and then the following year the stock just collapses with no support.
Yeh Un Dino ki Baat Hai: Year 2011 when Tata Motors took support at 200 week ma and delivered a mega rally in following 4 years. The stock rallied from levels of 140-150 to 600 in 4 years. That's a lot. It was a leadership stock
Even Leadership stocks run out of energy. In 2015: Chinese stock market collapsed and there was serious concern about China. It resulted in pullback in Tata Motors from levels of 600 (Concerns about JLR/Land Rover sales in China)
Tata Motors declined from 600 to levels of 280 but then delivered a steep bounce from 280 in October 2015 indicating some form of near term bottom. Then due to market correction: Tata Motors declined to 280 again by middle of Feb 2016. The stock bottomed with Nifty on Feb 12 2016 and from levels of 280 - the stock rallied back to 600 all in less than 8 months in CY2016. It was as if 2015 never happened.
2015: Big Decline; 2016:Big Rally. The Odd even Game started. And so here's how 2017 has been for the stock - again Big decline
Price Action suggests -stock is set to decline to 280 again.The hints were there for everyone to see in Feb 2017 itself
What does this all mean?
Tata Motors was a leadership stock between 2011 and 2014 when it rallied from 140 to 600
Now, the stock is trading in a range between levels of 280 and 600. Hence, a Deep Value Buyer can look at the stock near lows of 280. Any decline below 280 will raise different questions and stock will have to be re-evaluated.
Recommended Reading: Deep Value Strategy when it comes to Breakout Stocks (Case Study)
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers