Stock to buy: Sumeet Bagadia recommends this auto stock as his Janmashtami Pick

Stock to buy: Tata Motors, the automotive giant from the Tata Group, saw its shares trading flat on Monday. Despite this lackluster performance, the stock has experienced a remarkable rally over the past year, with an 80 percent increase in value. In 2024 alone, the stock has surged 39 percent year-to-date (YTD), delivering positive returns in 6 out of the 8 months so far this year.

Stock Performance Overview

Tata Motors has been a standout performer in the auto space, but the recent trend shows some cooling off. The stock has declined by over 5 percent in August, following two months of strong gains. In July, Tata Motors shares jumped almost 17 percent, while June saw an increase of over 7 percent. However, this positive streak was interrupted in May when the stock shed 8.4 percent.

The first four months of 2024 also saw consistent gains for Tata Motors, with the stock up 13.4 percent in January, 7.4 percent in February, 4.5 percent in March, and 1.5 percent in April. This steady performance reflects the market’s confidence in the company’s growth prospects, driven by its strategic initiatives and strong product pipeline.

Analyst Insights and Future Outlook

Looking ahead, market analysts remain optimistic about Tata Motors’ potential for upward momentum. Sumeet Bagadia, Executive Director at Choice Broking, has identified Tata Motors as his top pick for Krishna Janmashtami 2024. Based on his technical analysis, Bagadia believes that Tata Motors is poised for a decent upward movement, recommending it as a stock to buy and advising investors to consider adding more shares on dips.

Buy Tata Motors at ₹1,099 | Target Price: ₹1,205 and ₹1,260

Tata Motors shares are currently trading at ₹1,084.90. The stock is down 8 percent from its record high of ₹1,179.05 apiece, hit last month. Meanwhile, it has surged almost 83 percent from its 52-week low of ₹593.50, hit in August 2024.

"Tata Motors has recently broken out of a rounding bottom pattern, signaling a reversal and a strong bullish trend. A breakout above ₹1,100 could drive the stock towards the ₹1,205 and ₹s 1,260 levels with immediate resistance at ₹1,170. On the downside, ₹1,010 and ₹990 are critical support levels," said Bagadia.

Additionally, after a prolonged correction, the stock has reversed from its support level. The Relative Strength Index (RSI) is currently at 57.8, suggesting an upward trajectory and increasing buying momentum, he further stated.

According to Bagadia, based on these technical indications, a prudent strategy would be to consider buying opportunities on dips around ₹1,075 and ₹1,095 levels.

“In summary, technical analysis and current market conditions indicate that Tata Motors presents a promising buying opportunity for those targeting the ₹1,205 and ₹1,,260 price objectives,” Bagadia said.

He also advised investors that it is essential to apply prudent risk management strategies to navigate potential market fluctuations.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.