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Informist, Thursday, Mar. 27, 2025

By Anshul Choudhary

MUMBAI – A sudden announcement by US President Donald Trump that he will implement a 25% tariff on cars manufactured outside the US pushed investors to create short positions in Tata Motors. These tariffs are likely to hit sales of Tata Motors' UK subsidiary, which exports a significant part of its car fleet to the US.

"Tata Motors could face an impact due to its subsidiary, Jaguar Land Rover, which derives over 30% of its sales volume from the US market in 9MFY25 (Apr-Dec). With no manufacturing facility in the US, all JLR vehicles will be subject to tariffs, which could impact pricing and profitability," Mrunmayee Jogalekar, an analyst covering automobile sector at Asit C Mehta Investment Interrmediates, said in a note. Post the tariff announcement, shares of Tata Motors closed nearly 6% lower at INR 668.55.

Looking at option contracts of the stock expiring, which are set to expire next month, traders have likely added short positions with selling seen across call options. The highest open interest addition was seen at INR 670-700 call options and these levels are likely to act as immediate resistance. 

The stock has seen a sharp correction in the recent months amid doubts over is earnings growth in India as well as from its subsidiary JLR. The stock is down nearly 32% from its 52-week high of INR 1,179, which it had touched in July last year. Options data show the stock may face further selling pressure as tariffs hit sentiment around the stock. The highest open interest addition on the put side was at INR 670 put options, which was followed by INR 600 puts. It indicated the stock may fall another 10% if it slips below INR 670.

For the Nifty 50, a bounce back from its lower levels with the index ending 0.5% higher pushed traders to add long positions. Options data show the 50-stock index may rise and cross 24000 levels soon, but it will also depend on the extent tariffs India may face from the US next week. Trump is expected to announce reciprocal tariffs against other countries on Apr. 2.

"The FIIs long-short ratio is increased to 33% which shows there is short covering trigger in the market. Increasing put-call ratio from lower zone and decreasing India VIX indicates buying at lower levels. Now, it has to hold above 23400 zones for an up move towards 23800 then 24000 zones, while supports can be seen at 23400 then 23200 zones," Chandan Taparia, head of derivatives and technicals at Motilal Oswal Financial Services, said in a note.

The April futures contract of the Nifty 50 closed at a premium of 218.05 points to the spot index. Open interest in the contract rose 25.5% to 12.53 million, according to provisional data.

--Nifty 50 Mar closed at 23593.50, up 100.00 points

--Nifty 50 Apr closed at 23775.00, up 14.00 points; 183.05-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, IndusInd Bank, Kotak Mahindra Bank, Zomato, Tata Motors, State Bank of India, Infosys, Bharti Airtel, Bajaj Finance, Larsen & Toubro, NTPC, Jio Financial Services, InterGlobe Aviation, Tata Consultancy Services, and Hindustan Aeronautics were the most actively traded underlying stocks on the National Stock Exchange.  End

Edited by Deepshikha Bhardwaj

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