Tata Motors share price, which has been trading below 11-year lows since March 11 is one of the most affordable stock from the auto sector available for sale amid the Covid-19 pandemic. The stock closed 10.36% higher on Thursday at Rs 74.60 compared to the previous close of Rs 67.90 on BSE.
It hit a fresh 52-week low of Rs 63.60 on March 24 this year as market took into account slowing demand of passenger and commercial vehicles at home and abroad. Its arm Jaguar Land Rover (JLR) has also been witnessing decline in sales on account of rising number of coronavirus cases in UK, US, Europe, China and other markets.
The Tata Group firm logged a 82.69% year-on-year fall in its total sales to 12,924 units in March, compared to 74,679 units in the same month last year. Amid the nationwide coronavirus lockdown, Tata Motors' domestic sales were down by 84% in March 2020 to 11,012 units from 68,727 units on a yearly basis. JLR's UK sales in March slipped 30.9% to 17,175 units compared to the same period last year.
Coronavirus was a major factor behind JLR's weak performance in February. Tata Motors reported a huge 85% fall in February sales in China, the world's largest car market. Possible supply chain disruptions due to coronavirus and resultant shutdown of various parts of China led to the slump in sales. Before that, Jaguar Land Rover sales in China grew on an average about 25% year on year for the 6 months from July through December 2019.
The firm saw strong growth for the first 3 weeks of January. China accounts for almost a quarter of JLR's global sales, which in turn accounts for almost 73 per cent of Tata Motor's annual turnover of around $41 billion.
With huge disruptions in the firm's business, traders and investors are concerned about the outlook of the stock.
Abhijeet Ramachandran, Founder and Trainer at Tips2trade, said "Tata Motors has recovered well from its recent lows but faces stiff resistance at Rs 76-85 levels. Closing above Rs 85 only could trigger further buying or else a correction back to 60-64 levels could be a possibility."
"For long term, these levels are attractive, but better to wait for a dip to buy near 60-64 levels for better returns," he added.
Recently in an interview, Tata Sons chairman N Chandrasekaran said the passenger car and the commercial vehicle market had already hit the bottom even before coronavirus crisis started. "These sectors can now come back faster having hit a low. A little push with stimulus can help these sectors revive and get many people back to work which is critical for the economy to revive," he said.