Today's pick is TATAMOTORS (TTM). The stock began 2012 with an uptrend that took it all the way to its 52-week high of Rs. 320 in April. This was then followed by a correction to Rs. 200 levels which was seen in August. The stock has since been on an up-trend and looks poised to test Rs. 320 levels again. In the last three months, the stock has moved +15% vs. +5% of the Nifty's.
Oscillators RSI and CMO are flashing a bright red over-bought signal. Also, the stock is trading close to the upper Bollinger band which is short-term bearish.
The MACD line that just started moving down towards the signal line, along with the fall in histogram levels, is suggesting an imminent bearish move. However, long-term and short-term GMMA lines are experiencing an expansion giving out a bullish signal for the scrip.
TATAMOTORS's average correlation with the Nifty is 0.64 is positive and strong. The scrip will be replicating the movement of Nifty.
TATAMOTORS has a historical volatility in the range of 1 to 5. The scrip's volatility currently is in the lower end of the range. The high volatility could be attributed to the face value split from Rs. 10 to Rs. 2 last year (September 2011.)
(source: Reuters)
Analysts have mixed expectations with the scrip. Better than expected earnings for the current quarter can help bring some consensus to the table.
Dividend investors should also have a look at the DVR (Differential Voting Rights) version of the stock: TATAMTRDVR that is trading at almost half the valuation of the regular equity version.
To conclude, given these technicals, the stock is a short-term SELL. For the long-term we suggest a HOLD because of the strong underlying trend with a keen eye around Rs. 320 levels.
The article first appeared on Your Money@stockviz.biz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.