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TaMo, M&M: Price rise unlikely to put auto stocks in top gear, charts show

Automobile stocks like Tata Motor, M&M, HeroMoto Corp, and TVS motors need to cross significant hurdle to rally further

auto sector slowdown, automobiles, auto industry, automakers
Auto stocks to trade tepid until major hurdles are not leaped over
Avdhut Bagkar Mumbai
4 min read Last Updated : Dec 06 2022 | 3:44 PM IST
Within a week, three automobile companies -- Hero MotoCorp, Maruti Suzuki and Tata Motors -- have announced price hike. While the two-wheeler major's price hike came into force from December 1, Maruti and TaMo will hike prices from January 1, 2023. 

The three companies said they continue to witness increased cost pressure, driven by overall inflation, and the proposed price hikes will help mitigate some of the impact. Tata Motors, meanwhile, added that intends to increase passenger vehicle prices from next month to also ensure that its models comply with the stricter emissions norms that are set to take effect from April 2023.


In a separate development, Srinivasan Trust, one of the stake holders in TVS motor sold shares worth Rs 262 crores in the open market at a price close to Rs 1,020 per share, as per the bulk deal data on BSE India. 

On the bourses, the Nifty Auto index has slipped 0.2 per cent over the past one week as against the Nifty50's gain of 0.7 per cent. On Tuesday, the BSE Sensex and Nifty 50 dropped 0.50 per, while automobile stocks such as Hero MotoCorp and Eicher Motors tumbled 1.69 per cent and 1.10 per cent, respectively.

While Tata Motors shares observed subdued session, TVS Motor Company fell 0.80 per cent and Mahindra & Mahindra saw a cut of 0.40 per cent.


Amid these developments, here's the technical outlook for Automobiles stocks :

NIFTY AUTO
Outlook: Sideways trend
 
The current trend in the Nifty Auto index signifies a sideways texture in the range of 13,500 to 12,500 levels. The immediate hurdle for the upward move exists at 13,200, and a decisive close above this could trigger a possible breakout on the upside. A move under 12,650 could see intensified selling pressure. CLICK HERE FOR THE CHART

Tata Motors Ltd (TATAMOTORS) 
Likely target: Rs 460 and Rs480 
Upside potential: 7% to 11%

Shares of Tata Motors, recently, surpassed the 200-day moving average of Rs 432. They, however, have struggled to overcome the selling hurdle of Rs 445 to Rs 440 levels, shows the daily chart. In addition, there is a negative price divergence indicating weakness beneath this hurdle range. Thus, the current dicey sentiment may push the stock to Rs 420, which is the immediate support range. However, if the stock rebounds and takes out the hurdle range, the breakout could see Rs 460 and Rs 480 levels. CLICK HERE FOR THE CHART

TVS Motor Company Ltd (TVSMOTOR)
Outlook: The current trend is weak and bears may attack more if 100-DMA is undefended.
 
The stock lost the momentum the day it slipped beneath Rs 1,100 levels, as per the daily chart. This weakness has now seen elevated negative bias. While the current price is enduring the support of Rs 1,020 mark, any loss of this cushion could mean further weakness that may fall to Rs 900 levels. Immediate barrier is at Rs 1,080 mark. Moving Average Convergence Divergence (MACD), a technical indicator, fell under the zero line, suggesting bears are ready to grab any negative weakness of the stock. CLICK HERE FOR THE CHART

Mahindra & Mahindra Ltd (M&M)
Outlook: Trading in a range

On a broad assessment, Mahindra & Mahindra shares are trading in a range of Rs 1,350 to Rs 1,200 levels. As long as this range is protected, the trend to expected to remain sideways. Breach on either side would trigger a move of 200-300 points. CLICK HERE FOR THE CHART

Hero MotoCorp Ltd (HEROMOTOCO) 
Likely target: Rs 2,900 - Rs 2,950
Upside potential:  6%

An "Inverse Head and Shoulder" breakout has thrust the stock to higher levels in the last few sessions. This move appears to have more room ahead, provided the support of Rs 2,750 is protected on the closing basis. The upward rally may tussle to take out the Rs 2,900 - Rs 2,950 range, which is the upper ceiling for the stock. CLICK HERE FOR THE CHART

Topics :Tata MotorsTVS Motorautomobile industry

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