Tata Motors shares down 42% from peak: Should you buy the dip in this auto major's stock?
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Once a bellwether of India's auto rally, Tata Motors now finds itself trading at a steep 42% discount to its record high. After a bruising year of tariff shocks, margin pressures, and waning momentum, the stock is testing investor patience, and tempting bargain hunters. Is this slump a value trap or a rare buying opportunity in one of India's most storied automakers From a technical standpoint, Tata Motors shares are trading at Rs 682.30, below seven of their eight key simple moving averages (SMA), with the exception of the 100-day SMA. The Relative Strength Index (RSI) is hovering at 49.9, signalling a lack of directional conviction, while the MACD remains below the centre line at -1.0.Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities , noted that 'the stock has been moving in a 665–710 range since 16th June. Although the Auto index is outperforming the Nifty index, this stock has been a laggard.' He said, 'The RSI has been moving in the 40–60 range, supporting the sideways movement with the stock clearly lacking momentum. The ADX line is flat which further reinforces the lack of momentum in the stock.'Shah said that 'a decisive breakout on either side of the range can provide cues about the future direction of the stock.' He pointed to Rs 665 as a key support level and Rs 710 as immediate resistance. 'Break below 665, can lead to price moving towards 635, where its prior swing low is placed… Break above 710, can lead to price moving towards 735–740 zones, where its 200 DEMA is placed currently. Momentum is unlikely unless 735–740 is successfully taken out on the upside.'Adding to the technical picture, Kunal Kamble, Senior Technical Research Analyst at Bonanza, observed that 'since June 18, 2025, Tata Motors has been trading within a well-defined range of Rs 665–Rs 700, suggesting a consolidation phase after a prior uptrend.' He said, 'The 9 & 21 EMAs are flattening, reflecting the absence of a strong directional trend. The RSI trading below 50 suggests a lack of momentum… The DMI (Directional Movement Index) remains compressed, indicating low trend strength.'Kamble said 'a decisive breakout above Rs 700 could trigger a move toward Rs 740, while a breakdown below Rs 665 may lead the stock to retest support at Rs 635.' But for now, 'it's prudent to remain on the sidelines and wait for volume-supported confirmation of a breakout or breakdown.'Anuj Gupta, Director at Ya Wealth, said, 'Broadly the trend of Tata Motors is sideways as it is trading between the support of 600 levels and resistance of 750 levels.'Gupta said, 'For a very short term it has support at 670 levels and next support at 640 levels. Resistance at 710 and strong resistance at 750 levels.' He expects 'short term trend reversal in this stock,' and said, 'Investors may start investments in the Tata Motors around 640 to 670 range. We are expecting it may test 720 to 750 levels in the next 3 to 4 months. Keep support levels as stoploss levels.'Tata Motors shares rose 2% on Monday following an announcement that the U.S. and European Union had reached a deal to avert a major tariff escalation on EU exports, reducing car tariffs to 15% from a potential 30% hike. The new agreement replaces a 25% duty on EU auto exports with a baseline 15% rate, aligning it with the rate set for Japan.Anubhav Sangal, Senior Research Analyst at Bonanza, said the U.S-EU tariff agreement is 'expected to support volume growth for European automobile exporters, particularly Jaguar Land Rover (JLR), the luxury vehicle arm of Tata Motors.' He said that 'with the new deal reducing tariffs on vehicle exports from Slovakia to the United States from 27.5% to 15%, key models such as the Defender which is manufactured in Slovakia will now enjoy improved cost competitiveness in a critical market.'JLR had paused U.S.-bound shipments from its Slovakian plant in April due to higher tariffs, but resumed them in May. The North American market accounts for approximately 32% of JLR's total volumes.However, Sangal also flagged concerns. 'JLR trimmed its FY26 margin guidance to 5–7% (from earlier 10% guidance), primarily due to uncertainties over US tariffs.' He said, 'The company is currently facing several headwinds, like rising emission compliance and warranty costs in FY25, along with currency headwinds from USD depreciation against GBP.'At a group level, Tata Motors reported a 51% fall in consolidated net profit at Rs 8,470 crore in Q4 FY25, while revenue remained flat at Rs 1.19 lakh crore. EBITDA fell 4% to Rs 16,700 crore, with EBITDA margins slipping 60 basis points to 14%. For the same period, JLR posted £875 million in profit before tax, up from £661 million in Q4 FY24, aided by higher volumes and lower depreciation and amortisation.Despite Monday's bounce, analysts remain cautious in the near term. Kamble said, 'At this stage, it would be premature to call a trend reversal in Tata Motors, as the stock appears to be in the midst of a corrective wave.' He warned that 'the trend would only shift decisively if the stock manages to close above the swing high of Rs 745… Until that happens, bearish pressure remains intact.'Shah of SBI Securities echoed the sentiment, and said, 'Currently there are no trend reversal signs visible. The stock is moving in a tight range, forming thin body candles along the way. The momentum indicators and oscillators are further reinforcing the sideways movement in the stock.'Even as the stock remains vulnerable to further volatility, Anuj Gupta sees some cause for optimism. 'Now in India good monsoon may support the auto stock where Tata Motors may get good response due to availability in EVs segment. Upcoming festival season will also support the stock's price.'For now, Tata Motors remains range-bound and directionless, with near-term triggers hinging on sustained improvements in JLR's outlook and a breakout above key technical levels.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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