Rakesh Jhunjhunwala-owned Tata Motors’ share price has fallen 13% so far this year with the most recent fall coming as foreign investors book profits. Analysts at ICICI Direct believe that after the recent correction, auto sector stocks may now witness renewed momentum amid a sustained broader market recovery where Tata Motors is set to benefit. Analysing the derivative data for Tata Motors, ICICI Direct said there has been fresh long accumulation at lower levels in the stock. The brokerage firm has a target of Rs 515 per share, translating to around 20% upside from today’s opening at Rs 430 apiece.
“In the current fall the stock has declined sharply on the back of severe FIIs selling but found support near 380. Since then it has been crawling towards its Call base of 450 with significant OI addition in the future segment, indicating fresh long accumulation at lower levels,” ICICI Direct said.
On the options front, Tata Motors has the highest Call option base at the 500 strike followed by 450 strike. “Near the money Call strike of 430 and 440 in Tata Motors has started to witness closure, which could offer much-needed momentum in the current expiry itself,” the report added. Put open interest base in Tata Motors is firming up at 420 and 400 Put strike from where the stock has seen a sharp reversal recently. Analysts believe these levels are likely to act as strong support in the near term.
Further, ICICI Direct said that Tata Motors has taken support near Rs 380-400 levels on multiple instances in the past. “Also, looking at the significant delivery volume activity in October 2021 and then in early March 2022, these levels seem very crucial. In such a scenario, the positive bias may continue in the stock till these levels are held,” they added. Analysts have given a three-month time frame for trade.
Ace investor Rakesh Jhunjhunwala owns a 1.2% stake in the auto giant, according to data available on the bourses. Often called the big bull, Rakesh Jhunjhunwala owns 3,92,50,000 equity shares of Tata Motors or 1.2%. Rakesh Jhunjhunwala had bought shares of Tata Motors in the quarter ensign September 2020, after the stock had plummeted sharply owing to the covid-aided market sell-off. In the October-December quarter of this fiscal year, Rakesh Jhunjhunwala had bought more shares of the company.
