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The market mayhem continues to jolt investors as the last day of the week is also witnessing intense selling pressure, after 3 such days. China’s worsening situation seems to be snowballing into a big concern for the entire world which is quite evident in the ongoing selling spree in the financial markets.
In the midst of a sea of red numbers, Tata Motors (NS:) is frightening investors. It is an auto giant with a market capitalization of INR 1,41,366 crores and it is the only loss-making company in the index. In fact, for the last 4 financial years, the company has only been incurring losses and the first 2 quarters of FY23 are also loss-making. Despite being one of the best players in the EV space, with its Tata Nexon EV being the best-selling EV car in India, the company fails to impress investors.
Image Description: Weekly chart of Tata Motors with volume bars at the bottom
Image Source: Investing.com
The daily chart of Tata Motors is also turning into a treat for the bears. The stock broke below a very strong support of INR 390 in today’s session, which kept the stock from falling for over 6 months. During October and September 2022, it made multiple attempts to break below this support but not just failed miserably but also staged a sharp rally to over INR 440 which depicts how strong this demand zone was, which is finally out of the way.
For those looking to buy the dip, the next support level is around INR 360, which is another 6% plunge from the CMP of INR 382, by 1:07 PM IST. But it’s difficult to say whether this would be a strong enough buying zone to halt the fall.
Tata Motors is also called Tesla (NASDAQ:) of India, as both are the largest EV players in their respective countries and looking at Tesla’s chart, it’s difficult to be bullish on Tata Motors, especially considering the fact that the former is a profitable company and the latter is struggling to break even for the last 4 years.
Image Description: Weekly chart of Tesla with volume bars at the bottom
Image Source: Investing.com
Tesla has become one of the worst-performing stocks in the as it fell over 64% in the last one year. That’s a massive market cap erosion for a large-cap stock. With the stock currently, trading at $125, it might soon plunge to a double-digit figure, looking at the intensity at which it is falling. The stock is also down due to the new Covid-19 scare in China which might affect its production over there. Not to forget, in a popular survey, economists estimated a probability of 44% for a US recession in 2024, which is also adding to this selling spree.
Coming back to Tata Motors, the company has a significant presence in Europe, which is going through a tough time on the back of the Ukraine-Russia war. The manufacturing cost in Europe has skyrocketed which is vastly impacting the profit margins, making it almost certain to end FY23 with the 5th consecutive loss-making year. Tata Motors also has its JLR manufacturing plant in China, another reason to worry for the immediate future.
The EV picture might seem lucrative for the long term, but the charts are depicting a different scenario.
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