M&M shares dive 7% after RBL Bank stake buy; tech analysts see support around Rs 1,400 level

Shares of Mahindra & Mahindra Ltd (M&M) fell sharply in Thursday's trade after the automotive manufacturer picked up a stake in private lender RBL Bank. Mahindra said it bought a 3.53 per cent stake in RBL for Rs 417 crore and it plans to further raise it to 9.90 per cent, subject to regulatory approval. The stock today cracked 6.96 per cent to hit a day low of Rs 1,438 against a previous close of Rs 1,545.55. The counter has gained more than 15 per cent in 2023 so far and 27 per cent in the last one year.

On the technical front, analysts largely remained mixed on the counter. One said a correction in the stock price was long due, while another suggested that the overall bias is still positive. Support level could be seen around Rs 1,400.

Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One, said, "M&M plunged nearly 6 per cent over the news of taking a stake in RBL Bank. On the technical front, the stock has been in overbought territory for quite some time, and the recent fall could be seen as a price-wise correction in the counter, which was long due. As far as levels are concerned, a strong support base is placed near the Rs 1,400-1,380 zone, and till it sustains above the same, we may not witness further sell-off in the counter. On the higher end, the bearish gap of Rs 1,500-1,532 is likely to act as a sturdy hurdle and the counter is expected to hover within the mentioned range in the comparable period."

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Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "Mahindra & Mahindra has given a strong rally from Rs 1,190 to Rs 1,596. The near-term support would be maintained near the Rs 1,350 zone. The overall bias is still positive. One can expect further gains in the coming days with targets of Rs 1,500–1,560 open."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "At the current juncture, M&M is near its monthly central pivot range of Rs 1,400-1,430, which is ideally the support zone. One can add in the said range for target of Rs 1,560 and a stop loss would be placed at Rs 1,360."

The stock was last seen trading higher than the 50-day, 100- and 200-day moving averages but lower than the 5-day and 20-day moving averages. The counter's 14-day relative strength index (RSI) came at 42.09. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-earnings (P/E) ratio of 29.13 against a price-to-book (P/B) value of 4.67.

The scrip has an average target price of Rs 1,585, Trendlyne data showed, suggesting a potential upside of 9 per cent. It has a one-year beta of 1.03, indicating average volatility on the counter.

On BSE, around 3.24 lakh shares changed hands today, which was way more than the two-week average volume of 39,000 shares. Turnover on the counter stood at Rs 47.38 crore, commanding a market capitalisation (m-cap) of Rs 1,80,417.38 crore. There were 3,35,873 sell orders over buy orders of 71,503 shares.

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