Tata Motors, L&T: Short-term trading strategies post Q1 results

Tata Motors is likely to trade with a positive bias, with an upside target of around Rs 660; while Larsen & Toubro may witness some profit-taking in the near-term.

Shares of Tata Motors and Larsen & Toubro are likely to be on traders' radar on Wednesday, as the stocks react to the Q1 earnings and other corporate developments.

After market hours on Tuesday, Tata Motors posted a consolidated net profit of Rs 3,202 crore for the first quarter of 2023-24. In the same period last fiscal year, the company has reported a net loss of Rs 4,950.97 crore. Total income grew by 42.3 per cent year-on-year in Q1FY24 to Rs 1,03,596.60 crore from Rs 72,822.02 crore.

That apart, the company also announced the termination of its differential voting rights (DVR) or A-share programme. The market value of outstanding Tata Motors DVR was nearly Rs 19,000 crore, while the market value of ordinary shares stood at Rs 2.12 trillion. READ MORE

Meanwhile, Larsen & Toubro (L&T) reported a 46.5 per cent jump in Q1 consolidated net profit for the quarter ended June 2023, when compared with Rs 1,702.07 crore in the corresponding quarter a year ago. Total income rose by 34.1 per cent YoY to Rs 49,027.93 crore.

Further, the company's board also approved a share buyback worth Rs 10,000 crore. The company would buy back up to 33.3 million equity shares for a price of up to Rs 3,000 each. 

Against this backdrop, here's what technical data suggests for these two stocks for the near-term:

Tata Motors

Bias: Positive

Last close: Rs 639

Target: Rs 660; Rs 680

Support: Rs 630; Rs 620

Tata Motors has witnessed a steep rally since the start of the fiscal year 2023-24, with the stock up nearly 49 per cent from levels of Rs 420. A higher tops and higher bottoms pattern is clearly visible on the daily charts during the said period.

On dips, the stock has consistently found support around its short-term (20-DMA) daily moving average, and then bounced back to test the higher-end of the Bollinger Bands on the daily chart. The stock currently is closer to the higher end of the Bollinger Bands, which stand at Rs 646.

In the near-term breakout and sustained trade above Rs 646, could add momentum to the upside, wherein the stock could test Rs 660 - Rs 680 on the upside. On the contrary, failure to sustain above Rs 646, could trigger some profit-taking, and the stock could potentially dip to Rs 630 - 620 range.

F&O Cues

With just two days remaining for the July series expiry, the options data shows presence of highest open interest (OI) at the Rs 650 Call, followed by Rs 640 and Rs 630. Based on the fresh additions of OI on Tuesday, it seems that the immediate upside for the stock may be capped around Rs 680, with resistance emerging around Rs 658 - 660 levels.

Meanwhile, highest OI among Puts is visible at Rs 600 followed by Rs 630. This further reinstates the technical support range of Rs 630 - 620 on the daily chart.

Larsen & Toubro (L&T)

Bias: Time to be cautious

Last close: Rs 2,561

Target: Rs 2,325

Resistance: Rs 2,585; Rs 2,638

Support: Rs 2,525; Rs 2,400

Larsen & Toubro has been a stellar outperformer in the last 13 months, as the stock has appreciated over 76 per cent as against a 25 per cent rally in the Nifty 50 benchmark during the period.

At times of intermediate dips, the stock has found support around its 100-DMA, suggesting a broader entry and exit price for traders. Presently, the stock is slightly overbought, and is seen facing resistance around the higher-end of the Bollinger Bands on the weekly chart at Rs 2,585.

The Rs 2,585-level shall be the immediate pivot point, sustained trade above the same could trigger an up move towards the recent peak at Rs 2,638, above which a near hurdle is seen at Rs 2,650, indicates the monthly Fibonacci chart.

On the flip side, failure to sustain above Rs 2,585, could trigger a fresh round of profit-taking at the counter. On the downside, near support is visible at Rs 2,525, below which a dip towards Rs 2,400 seems likely. The 20-DMA for the stock stands at Rs 2,325.

F&O Cues

The highest OI among Calls at the L&T counter is seen at Rs 2,500 followed by Rs 2,600 and Rs 2,700. Based on the OI build-up and option premium, the stock is likely to face resistance around Rs 2,620 - Rs 2,640.

Whereas, the highest OI among Puts too is visible at Rs 2,500 Strike Price. Thus suggesting that traders are convinced that the stock may hold around the Rs 2,500-level till the July expiry.