Tata Motors stock hammered down..

Tata Motors share price has fallen 17.7 percent in last 2 days from its intra-day high of 283.1 on 29th May. The auto-maker declared its Q4 and full year results on 29th May. JLR contributes majority of Tata Motors net profit and any dip in JLR margins would be detrimental to Indian auto maker’s fortune. Luxury automaker’s operating margins for the quarter were 14.6 percent as compared to 17-17.5 percent of analyst expectations.

I think more than results, it was a clear case of over expectation. Stock was over-owned and every major fund had been bullish on the stock. So, in the short-term it was an overreaction and the stock was hammered down. It would take some time for Tata Motors stock to stabilize and move back up.  I sold a few OTM calls of June series, but I am not very aggressive in selling calls. Main reason for this is that in the short-term stock is oversold and also JLR May numbers are due around mid-month. I would like to see JLR May numbers after not so good April numbers. Moreover, June month is event heavy and we could see movement both ways. We might even see action from RBI after shocking Q4 GDP numbers.


3 Responses to “Tata Motors stock hammered down..”

  1. 1 Mayuresh Shilotri
    June 1, 2012 at 4:04 pm

    So you expect it to move down further??

    • June 1, 2012 at 8:22 pm

      Yes, in case JLR numbers are bad it might even go down below 200. But, it will be a good long term buy at those levels. Even at current level of 223, it is a decent short term buy.

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