The market has been in a corrective phase for the seventh consecutive month, with many stocks taking a significant dip of 20-40%. After a period of stellar returns between 2020 and 2024, investor expectations were sky-high, but the recent downturn has led to many losing interest in the markets. While these dips have been challenging, they also present an incredible opportunity for long-term investors. Stocks trending positively over the long term and have recently fallen into key demand or support zones are worth keeping an eye on.
Rather than retreating in uncertainty, now is the time to focus on accumulating shares in these solid companies that have weathered previous storms and show strong growth potential. Let us dive into three promising auto stocks that are currently presenting potential buying opportunities.
Tata Motors has long been a household name in the Indian automotive industry, and its stock has undergone impressive growth over the past few years. From a low of Rs 65 in 2020 to a high of Rs 1,179 in 2024, the stock experienced a remarkable rally, reflecting the company’s strong performance and investor confidence.
However, following this robust uptrend, the stock has retraced by 50%, dipping to Rs 606, corresponding to a key Fibonacci retracement level, indicating a strong support zone.
Interestingly, the high point of 2015-2016 at Rs 600 witnessed a correction to Rs 65 in 2020. The breakout from Rs 600 in the reversal has been retested, offering a potential opportunity for investors looking for a discounted entry point into a fundamentally strong company. Furthermore, the stock has now entered the 50-MEMA Moving Average Channel’s support zone, confirming that this could be a solid demand zone.
For investors with a long-term view, Tata Motors presents a great chance to enter at a discount, especially given its track record and growth potential in both the domestic and international markets.
Hero MotoCorp, a leader in the Indian two-wheeler market, has recently seen a breakout after a seven-year consolidation period.
In 2024, the stock broke out from a significant resistance zone at Rs 4,000 and surged to Rs 6,246, reflecting a powerful rally. This breakout is an essential technical indicator, showing that Hero MotoCorp is primed for future growth. The stock’s recent price correction back to the breakout level presents a potential buying opportunity.
What’s more, the breakout zone has now been retested, and the stock is hovering around this level, signalling the potential for further upward movement. Coupled with this, the 50-MEMA Channel is perfectly positioned at the retest zone, indicating a potential long-term opportunity for investors.
Bosch Ltd., a global player in the auto components industry, is another stock that has seen a healthy retracement in recent months. On the monthly chart, the stock has retraced 50% of its previous high, which is a classic signal of a healthy pullback and potential reversal. This retracement aligns with a critical Fibonacci level, suggesting that the stock could be poised for a rally once again.
Similar to Tata Motors, Bosch’s price action is now trending within the 50-MEMA Moving Average Channel at its retest levels. This pattern signals the potential for a bullish reversal, offering investors a timely entry point.
Given Bosch’s established market leadership, technological innovations, and strong growth prospects, this retracement could serve as a potential bargain-buying opportunity for long-term investors looking to capitalise on future growth in the automotive and mobility sectors.
An Opportunity to Seize
The recent market corrections have created an excellent opportunity for investors to focus on high-quality stocks in the auto industry that have dipped into key support zones. Tata Motors, Hero MotoCorp, and Bosch Ltd. are all potential candidates for investors looking to accumulate shares at attractive levels. Each of these companies has demonstrated long-term growth potential and now offers a chance to enter at a discount.
With a bullish long-term trend and technical signals indicating strong demand zones, these auto stocks could provide substantial returns as the market rebounds. It’s time to seize the moment and add these promising stocks to your portfolio.
Disclaimer:
Note: We have relied on data from throughout this article. Only in cases where the data was unavailable have we used an alternate but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Brijesh Bhatia has over 18 years of experience in India’s financial markets as a trader and technical analyst. He has worked with UTI, Asit C Mehta, and Edelweiss Securities. Presently, he is an analyst at Definedge.
Disclosure: The writer and his dependents do not hold the Stocks discussed in this article. However, clients of Definedge may or may not own these securities.
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