Tata Chemicals shares extend fall, tank 6% today amid heavy volumes; here's why

Shares of Tata Chemicals Ltd plunged on Tuesday, extending their fall for the second straight session amid heavy volumes. The stock dived 6.06 per cent to settle at Rs 931.90 over its previous close of Rs 992.05. A total of 5.55 lakh shares changed hands today on BSE, which was more than 20 times higher compared to the two-week average volume of 27,000 shares. Turnover on the counter stood at Rs 51.87 crore, commanding a market capitalisaton (m-cap) of Rs 23,740.74 crore.

The scrip has lost 23.28 per cent from its 52-week high of Rs 1,214.65, a level seen on October 11 last year. That said, it has gained 20.42 per cent from its one-year low of Rs 773.90, hit on July 1, 2022.

Analysts said that today's sharp fall came on the back of a cut in soda ash prices. On the technical front, strong support on the counter could be seen at Rs 912, followed by Rs 900 and Rs 880 levels.

Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One, said, "Tata Chemicals has seen some correction in the recent period that plunged it below the cluster of its EMAs on the daily charts, indicating bearishness in the counter. On the technical front, the stock is heading toward the critical support of the Rs 900 zone, below which the charts may disrupt and the scrip could plunge further. On the flip side, the immediate support is placed at the bearish gap of Rs 980-986, followed by the 200-SMA placed around Rs 1,020 in the comparable period."

Jigar S Patel, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers, "Since the last 2 sessions, the said counter has tanked by almost 10 per cent. One needs to wait and watch now because crucial support levels are Rs 880-900 levels, which are way below the current market price. On the indicator Front: DMIs have made a negative cross thus confirming our bearish stance on the counter."

AR Ramachandran from Tips2trades said, "Tata Chemicals looks bearish on the daily charts with strong support now at Rs 912. Investors should wait for prices to fall near support levels to buy for targets of Rs 980-1,030 in the near term."

Ravi Singhal, CEO at GCL Broking, said, "After a cut in the price of soda ash in India, profitability can be affected in this quarter. The stock looks weak from here." He suggested a downside target of Rs 750 while keeping a stop loss at Rs 999.

Manoj Dalmia, Founder and Director at Proficient Equities, said "Based on Tata Chemicals' financial performance over the years, the balance sheet analysis shows steady growth, with an increase in total liabilities due to investments in fixed assets, shares, and securities. However, the profit and loss statement shows fluctuation in revenue and net profit, with some years showing losses due to high expenses. The stock saw a significant drop due to a reduction in soda ash prices."

Echoing similar views, Manish Mishra, Virtual CFO, said the stock slumped following a cut in soda ash prices, one of the company's key products.

"However, the Indian chemical industry is projected to grow at a CAGR of 9.30 per cent between 2021 and 2026, which presents a positive outlook for the company's long-term prospects. It is important for investors to evaluate the company's financials thoroughly before making investment decisions," he stated.

Meanwhile, Indian equity indices extended their fall for the second straight session after a positive start. The domestic indices were pulled down today due to weakness in financials, consumer and energy stocks.

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