Nifty Auto rallied around 20% in the last 2 months from the lows of March 2023 and entered the blue-sky territory. Auto sector stocks outperformed the benchmark index and one stock from the same sector is now ready to register the multiyear breakout and continuation pattern at the same time.
The stock is Tata Motors Ltd, a part of the illustrious multi-national conglomerate the Tata Group. It is a leading global automobile manufacturer with a portfolio that includes a range of cars, utility vehicles, trucks, buses, and defence vehicles. It operates through the Automotive and Other segments. The Automotive segment includes all activities relating to the development, design, manufacture, assembly and sale of vehicles including vehicle financing, as well as the sale of related parts and accessories. It also consists of sub-segments, such as Tata Commercial Vehicles, Tata Passenger Vehicles, Jaguar Land Rover, and Vehicle Financing. The Others segment includes information technology and insurance broking services. The company was founded on September 1, 1945, and is headquartered in Mumbai, India.
On the weekly chart, if we draw the trendline from the highs of the first week of September 2016 (Rs 598.40) and mid-week of November 2021 (Rs 536.70) we’ll get a trendline of the Multiyear breakout pattern.
On the daily chart, the stock is consolidating in a range from 15 May 2023 by making higher lows and lower highs. This action formed a triangular flat correction type of pattern. If we draw the trendline from the highs of 15 May 2023 (Rs 537.15) and 23 May 2023 (Rs 531) we’ll get the higher side of this pattern and from the lows of 19 May 2023 (Rs 504.75) and 25 May 2023 (Rs 509.1) will be the lower side of this pattern.
Interestingly, the stock is now trading below these trendlines and closing above Rs 540 will register a breakout on both weekly and daily charts. The combined targets of this pattern will be around Rs 710 which is around 35% of the current levels. Swing traders and long-term investors looking for opportunities in the auto sector can add this stock to their watchlist.