Auto index reverses, Tata Motors drags

Indian stock markets turned subdued at the start of the week, despite a very sharp upside and positive closure in the last week. Nifty Auto index which shed more than 1 per cent is the top sectoral loser. Tata Motors which is a part of Nifty50 and forms almost 10 per cent of Nifty Auto, has tumbled nearly 4 per cent and was the top loser in both the indices on Monday.

Donald Trump worsens the situation by threatening a 20 per cent tariff on all imports of European Union-assembled cars. This may dampen exports of JLR vehicles to the US, where JLR is the largest revenue generating vehicle for Tata Motors. JLR fetched nearly 77 per cent of Tata Motors’ FY18 revenue.

Technically, Tata Motors has not been keeping well since the start of September 2016. The stock has been trading with lower tops and lower bottoms. The stock had attempted a prior top breakout during November 6, 2017 at 468 but could not sustain and reversed.

Recently, the stock breached its horizontal trendline on the downside at 328 on May 14, 2018. Thereafter, the stock hit 52-week low at 281.60 on May 31. The stock attempted a bounce hitting 315.55 levels, but could not breach prior resistance. The stock consolidated for 10 trading sessions and drowned on Monday. Going forward, we hold 313-316, followed by 320 as the resistance, while 283-281 as the support.