Tata Motors stock tests 200-DMA ahead of demerger; trading strategy here

Tata Motors stock has been attempting to conquer the 200-day moving average for the last month, post the breakdown a year ago in October 2024; shows the daily chart.

Tata Motors stock started October-month with a strong 5.5 per cent rally after the company announced the record date for Tata Motors Commercial Vehicles demerger.  Earlier in August, Tata Motors board approved the demerger of the company's commercial vehicles (CV) business from Tata Motors to Tata Motors Commercial Vehicles (TMLCV), and merger of Tata Motors Passenger Vehicles (TMPV) undertaking the passenger vehicles (PV) business with Tata Motors.  Pursuant to which, Tata Motors on October 1 fixed October 14 as the "Record Date" for the purpose of ascertaining the shareholders of the company who shall be allotted shares of Tata Motors Commercial Vehicles in 1:1 ratio.  However, in the following four trading sessions the Tata group auto stock has slipped by almost 7.5 per cent from its October high of ₹740, and in the process is seen trading back near its long-term 200-Day Moving Average (200-DMA).  ALSO READ | Tyre stocks rally up to 4% in weak market; MRF hits record high  With just another 3 trading sessions remaining for the demerger "Record Date"; which way will Tata Motors stock swing? Here's what the technical chart suggests.

Tata Motors

Current Price: ₹688  Likely Target: ₹821 / ₹600  Upside Potential: 19.3%  Downside Risk: 12.8%  Support: ₹667; ₹620  Resistance: ₹740  Tata Motors stock has been trading around its 200-DMA for more than a month. The daily chart shows that the stock is seen attempting to conquer this key average after nearly a year. At present levels, the stock trades almost 42 per cent lower when compared to its peak share price of ₹1,179 registered in July 2024. 

 

  Technically, the stock seems to be in consolidation mode for the last six months of or so. The medium-term chart shows that the stock has been broadly consolidating in the range of ₹600 - ₹740, barring a sharp dip to ₹536 in the month of April 2025.  As per the daily chart, the near-term bias is likely to remain cautiously optimistic as long as Tata Motors holds above ₹667 levels; below which a re-test of the lower-band of existing trading band could see the stock drop to ₹620 - ₹600 levels.  On the upside, the stock needs to break and trade consistently above ₹740 levels, for a likely rally towards the 100-Week Moving Average (100-WMA), which stands at ₹821. The stock is yet to witness any meaningful recovery post the 42 per cent fall from the peak; hence a sharp pullback cannot be ruled out.