Tata Motors corrects after five-day rally

Tata Motors fell 1.80% to Rs 497.65, on profit booking after soaring in the past five sessions.

Oct 14, 2021 11:10 IST capital market

Shares of Tata Motors surged 50.82% in the past five sessions to end at Rs 506.75 on 13 October 2021 from its recent closing low of Rs 336 on 6 October 2021.

The stock hit a 52-week high of Rs 532.40 today. It has surged 294.96% from its 52-week low of Rs 126 hit on 16 October 2020. In the past one month, the stock has surged 62.87% as against 4.98% rise in the Sensex.

On the technical front, the stocks RSI (relative strength index) stood at 75.27. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

The stock was trading above its 20-day simple moving average (SMA) placed at 463.05 and 50-day SMA at 411.56. These levels will act as near-term support.

The recent surge materialised after Tata Motors on 12 October 2021 announced that it will raise $1 billion (Rs 7500 crore) in its passenger electric vehicle business at a valuation of upto $9.1 billion from TPG Rise Climate.

TPG Rise Climate along with co-investors ADQ, shall invest Rs 7,500 crore in compulsory convertible instruments to secure between 11% to 15% stake in a newly incorporated subsidiary of Tata Motors, translating to an equity valuation of up to $9.1 billion.

The new company shall leverage all existing investments and capabilities of Tata Motors and will channelise the future investments into electric vehicles, dedicated BEV platforms, advanced automotive technologies and catalyse investments in charging infrastructure and battery technologies.

Over the next 5 years, this company will create a portfolio of 10 electric vehicles (EVs) and in association with Tata Power, catalyse the creation of a widespread charging infrastructure to facilitate rapid EV adoption in India.

Tata Motors is a global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and buses. The auto majors consolidated net loss contracted to Rs 4,450.92 crore in Q1 FY22 as compared to a net loss of Rs 8,437.99 crore in Q1 FY21. Total revenue from operations soared 107.63% YoY to Rs 66,406.45 crore in Q1 FY22.

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