Share Markets Live: Sensex, Nifty Swing; ONGC Leads Selloff In Energy Shares

Shares of Tata Motors Ltd. fell to the lowest in two months after the automaker’s luxury arm said it expects chip shortages to worsen in the ongoing second quarter, hurting sales. Still, that didn’t deter most analysts from staying bullish on the company.

Jaguar Land Rover on Tuesday said chip shortages in the quarter ending September are expected to be greater than in the preceding three months, resulting in wholesale volumes about 50% lower than planned during the period.

Chip shortage is very dynamic and difficult to forecast, Tata Motors said in an exchange filing. “Some level of shortages will continue through to the end of the year and beyond.” The company, however, will prioritise production of higher margin vehicles using the available chip supply, and expects the situation to start improving in the second half of the ongoing financial year.

Analysts, too, expect Tata Motors to start to turn around by the next fiscal, defying the near-term pressures. Of the 34 analysts tracking the stock, 21 have a ‘buy’ rating, seven suggest a ‘hold’ and six recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies a upside of 16.2%.

To read what analysts had to say, click here

Morgan Stanley rated ONGC Ltd. as its least preferred stock, citing the company’s lack of volume growth, slow monetisation of reserves and limited clarity on decarbonisation plans.

Key takeaways from the note:

1. We’re bullish on oil, but not ONGC as it remains most leveraged among peers to oil prices, but allocates the cash generated less efficiently.

2. Over the past decade, volumes and earnings have been flattish despite $80 billion in investments. A majority of it was spent to maintain production from mature domestic fields and expand overseas.

3. Oversupplied energy markets have meant no growth in earnings. Since 2010, ONGC's production has declined 1.2% per annum and we see limited clarity for improvement even in 2021 and 2022.

4. Higher oil and potentially gas prices too are tailwinds, but we prefer GAIL and refiners to play the upside.

The research firm maintained its underweight rating on the stock, but increased its target price from Rs 120 to Rs 126.

Tata Consultancy, Asia’s largest software outsourcing provider, is scheduled to kick start India’s earnings season for the quarter ended June, with its results due after the market closes tomorrow. Technology stocks were among the biggest drags on the Sensex.

Motilal Oswal Financial Services Ltd. rose 6.2%. Trading volume was 11 times the average for this time of day.

• The stock was the best performer among its peers.

• Trading volume was 863,147 shares, 11 times the 20-day average of 79,185 shares for this time of day.

• The relative strength index on the stock was above 70, indicating it may be overbought.

• Analysts have four buy, no hold, and no sell recommendations on the stock.

• The price target of Rs 833.33 represents a 10% decrease from the last price