SubscribeSign In
Tata Motors Ltd.
  • Overview
  • News
  • Financials
  • Technicals
  • Peers
  • Shareholdings
  • MF
  • F&O
  • Corporate Actions
  • About

Tata Motors Ltd.

  • 184.851.25 (0.68%)
  • Closed
  • As On: 03 Dec, 2020, 03:59 PM IST
  • Open185.00
  • High186.00
  • Low183.25
  • Prev Close183.60
  • Volume3,33,32,481
  • VWAP(₹)184.78
  • November sales - M&HCV and passenger vehicles - Baby step toward re-rating

    HCV sales tend to show an uptick before broader economic numbers show an improvement. Medium and heavy commercial vehicles ( M&HCV) sales in domestic markets saw a month on month increase of 13 percent though YoY they were still down by 6 percent. First signal that worst for economy is behind us ? . YoY growth of 108 percent in passenger vehicles sales indicates that new models launched in recent months are getting higher acceptance.
  • Target zero debt

    The company plans to have zero debt by 2024. This would entail, reducing capex and selling some of the non-core assets. At the first hint from the company that it is on track to achieve what it is claiming, its stock might see a re-rating.
  • Jaguar holds the key

    Though the sales of Jaguar have picked up in china, Europe -- which is getting into its second lock down phase -- might create some short term issue. Recent product launches might have to bear the brunt of this second phase.
  • New Product launches

    In the domestic market, new models have been launched. Initial response has been better than earlier launches. But what needs to be watched is whether the momentum will sustain and other launches would follow.

Key Metrics

  • PE Ratio(x)-3.38
  • EPS - TTM(₹)-54.74
  • MCap(₹ Cr.)57,099.68
  • MCap Rank6
  • PB Ratio(x)1.04
  • Div Yield(%)0.00
  • Face Value(₹)2.00
  • 52W High(₹)201.70
  • 52W Low(₹)63.50
  • MCap/Sales0.10
  • Beta(1 Month)2.09
  • BV/Share(₹)206.84

Returns

  • 1 Day0.68%
  • 1 Month37.84%
  • 3 Months21.73%
  • 1 Year16.85%
  • 3 Years-53.66%
  • 5 Years-54.43%

Financials

    • Quarterly Topline Performance

      Company witnessed QoQ revenue growth of 66.2%, which is highest in the last 3 years. (Source: Consolidated Financials)
    • Topline Contraction

      Sales de-grew by 13.4%. Company witnessed revenue contraction for the first time in last 3 years. (Source: Consolidated Financials)
    Sep 2020Jun 2020Mar 2020Dec 2019Sep 2019
    Total Income54,163.2232,589.5963,057.4372,576.2066,104.51
    Total Income Growth (%)66.20-48.32-13.129.796.10
    Total Expenses53,033.1736,896.5170,417.5769,482.6963,647.92
    Total Expenses Growth (%)43.73-47.601.359.17-0.28
    EBIT1,130.05-4,306.92-7,360.143,093.512,456.59
    EBIT Growth (%)---337.9225.93-
    PAT-314.45-8,437.99-9,894.251,738.30-216.56
    PAT Growth (%)---669.19--
    EBIT Margin (%)2.09-13.22-11.674.263.72
    Net Profit Margin (%)-0.58-25.89-15.692.40-0.33
    Basic EPS (₹)-0.87-23.46-27.505.02-0.64
    Sep 2020Jun 2020Mar 2020Dec 2019Sep 2019
    Total Income9,910.082,821.2010,001.7911,194.4210,361.90
    Total Income Growth (%)251.27-71.79-10.658.03-24.66
    Total Expenses10,487.464,458.6614,230.5711,739.7311,133.97
    Total Expenses Growth (%)135.22-68.6721.225.44-16.67
    EBIT-577.38-1,637.46-4,228.78-545.31-772.07
    EBIT Growth (%)-----297.05
    PAT-1,212.45-2,190.64-4,871.05-1,039.51-1,281.97
    PAT Growth (%)-----
    EBIT Margin (%)-5.83-58.04-42.28-4.87-7.45
    Net Profit Margin (%)-12.23-77.65-48.70-9.29-12.37
    Basic EPS (₹)-3.37-6.09-13.54-3.01-3.78
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Revenue2,64,041.123,04,903.712,95,508.072,70,447.052,73,930.95
    Total Revenue Growth (%)-13.403.189.27-1.273.88
    Total Expenses2,71,749.663,06,623.302,86,328.182,62,246.822,57,954.83
    Total Expenses Growth (%)-11.377.099.181.666.68
    Profit after Tax (PAT)-12,070.85-28,826.238,988.917,454.3611,579.31
    PAT Growth (%)--420.6920.59-35.62-17.21
    Operating Profit Margin (%)-0.171.334.704.617.64
    Net Profit Margin (%)-4.62-9.543.052.764.24
    Basic EPS (₹)-34.88-84.8926.4621.9434.25
    FY 2020FY 2019FY 2018FY 2017FY 2016
    Total Revenue45,311.2271,757.4260,389.0145,297.4044,247.78
    Total Revenue Growth (%)-36.8618.8333.322.3715.90
    Total Expenses49,927.6469,155.4260,369.2747,311.9643,820.13
    Total Expenses Growth (%)-27.8014.5527.607.974.97
    Profit after Tax (PAT)-7,289.632,020.60-1,034.85-2,429.60-62.30
    PAT Growth (%)-460.77----
    Operating Profit Margin (%)-6.016.352.99-1.004.71
    Net Profit Margin (%)-16.592.91-1.75-5.48-0.14
    Basic EPS (₹)-21.065.94-3.05-7.15-0.18

    All figures in Rs Cr, unless mentioned otherwise

    • Trailing Behind 4-year Average ROA

      Company witnessed ROA of -3.74% in last FY which is lower than its 4-year average ROA of -1.98% along with asset turnover ratio of 81.04. (Source: Consolidated Financials)
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Total Assets3,22,121.263,07,194.533,31,350.512,73,754.362,67,141.15
    Total Assets Growth (%)4.86-7.2921.042.4811.93
    Total Liabilities2,58,229.172,46,491.912,35,397.542,15,239.301,87,755.90
    Total Liabilities Growth (%)4.764.719.3714.643.18
    Total Equity63,892.0960,702.6295,952.9758,515.0679,385.25
    Total Equity Growth (%)5.25-36.7463.98-26.2940.02
    Current Ratio (x)0.850.850.951.001.03
    Total Debt to Equity (x)1.581.510.821.280.78
    Contingent Liabilities15,590.7517,148.6415,431.4624,214.5343,504.88
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Total Assets62,589.8760,909.6359,212.3058,878.2856,676.00
    Total Assets Growth (%)2.762.870.573.8913.48
    Total Liabilities44,202.2238,747.1139,041.3237,715.6733,413.89
    Total Liabilities Growth (%)14.08-0.753.5112.87-4.75
    Total Equity18,387.6522,162.5220,170.9821,162.6123,262.11
    Total Equity Growth (%)-17.039.87-4.69-9.0356.51
    Current Ratio (x)0.530.580.620.590.63
    Total Debt to Equity (x)1.140.790.810.890.61
    Contingent Liabilities4,737.197,246.045,269.634,787.17-

    All figures in Rs Cr, unless mentioned otherwise

    • Debt Coverage Capability

      Company will take 3.74 years to pay off its debt obligations with latest operating cash flow of Rs 26632.94 cr. (Source: Consolidated Financials)
    • Increase in Cash from Investing

      Company has used Rs 34170.22 cr for investing activities which is an YoY increase of 73.36%. (Source: Consolidated Financials)
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities26,632.9418,890.7523,857.4230,199.2537,899.54
    Net Cash used in Investing Activities-34,170.22-19,711.09-26,201.61-38,079.88-37,504.43
    Net Cash flow from Financing Activities3,389.618,830.372,011.716,205.30-3,795.12
    Net Cash Flow-3,092.006,843.05973.93-3,166.85-2,589.48
    Closing Cash & Cash Equivalent18,467.8021,559.8014,716.7513,986.7617,153.61
    Closing Cash & Cash Equivalent Growth (%)-14.3446.505.22-18.46-18.81
    Total Debt/ CFO (x)3.744.823.272.471.63
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Net Cash flow from Operating Activities-1,454.596,292.634,133.941,453.452,702.98
    Net Cash used in Investing Activities-4,718.86-3,820.55-710.27-2,859.00-3,264.22
    Net Cash flow from Financing Activities7,749.21-2,529.70-3,105.631,208.80-78.87
    Net Cash Flow1,657.90-59.42317.88-198.13-639.40
    Closing Cash & Cash Equivalent2,145.30487.40546.82228.94427.07
    Closing Cash & Cash Equivalent Growth (%)340.15-10.87138.85-46.39-50.45
    Total Debt/ CFO (x)-14.372.793.9312.975.27

    All figures in Rs Cr, unless mentioned otherwise

  • AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)-19.13-47.909.4112.8314.66
    Return on Capital Employed (%)-0.252.497.367.8613.03
    Return on Assets (%)-3.74-9.382.712.724.33
    Interest Coverage Ratio (x)-0.060.702.962.934.27
    Asset Turnover Ratio (x)81.0498.2888.9198.51102.21
    Price to Earnings (x)-2.12-2.0512.3821.2311.34
    Price to Book (x)0.410.981.172.731.66
    EV/EBITDA (x)4.404.274.386.504.34
    EBITDA Margin (%)8.029.1512.0211.2513.76
    AnnualFY 2020FY 2019FY 2018FY 2017FY 2016
    Return on Equity (%)-39.649.11-5.13-11.48-0.26
    Return on Capital Employed (%)-7.1811.575.04-1.195.31
    Return on Assets (%)-11.643.31-1.74-4.12-0.10
    Interest Coverage Ratio (x)-1.342.451.01-0.281.27
    Asset Turnover Ratio (x)70.18113.6199.3575.2675.59
    Price to Earnings (x)-3.5129.33-107.53-65.36-2,500.00
    Price to Book (x)1.392.675.517.485.64
    EV/EBITDA (x)58.6510.0626.0368.2133.26
    EBITDA Margin (%)1.6610.828.275.8410.15
    • Focus area : improve volumes and reduce costs and improve cash flows

      The Company has taken various initiatives, to maintain its leadership, improve market share and financial performance. It has been aggressively pursuing and implementing its strategies to improve volumes and reduce costs and improve cash flows, launch of new products with advanced technologies, (particularly in passenger vehicles) coupled with sale, service, marketing campaigns and customer engagement programs.

    • Scenario Building **

      Global industry volumes of about 55 million units for calendar year 2020 and about 65 million units for calendar year 2021, representing decreases of about 39% and 28% respectively compared to calendar year 2019. This represents a more L shaped recovery from COVID-19, based on selected external industry downside forecasts. • Compared to Fiscal 2019/20, a decline in JLR wholesale volumes for Fiscal 2020/21 and Fiscal 2021/22 broadly similar to the assumed industry decline referenced, with adjustment for the effect of moving from a calendar year to the Group’s 31st March year-end.

    • New Product launches

      After a hiatus of nearly 4 years, the back-to back product launches in PV and CV had a rejuvenation effect for the Tata Motors brand supporting the topline focus gaining market share across all categories.

    Show More

Technicals

  • No Data Available

  • 45%
    Positive Movement
    since 1st Jan 2005
    on basis
    55%
    Negative Movement
    since 1st Jan 2005
    on basis
    Exclude

    Global Meltdown1st Jan 2008 to 10th Nov 2008

    Covid Crisis1st Feb 2020 to 31st Mar 2020

  • R1186.15Pivot

    184.70

    S1183.40
    R2187.45S2181.95
    R3190.20S3179.20
  • 5 Days14 Days28 Days
    6.196.416.19

Peers

    • CHART
    • TABLE
    • 1D
    • 1W
    • 1M
    • 3M
    • 6M
    • 1Y
    • 5Y
  • NAMEP/E (x)P/B (x)ROE %ROCE %ROA %Rev CAGR [3Yr]OPMNPMBasic EPSCurrent RatioTotal Debt/ Equity (x)Total Debt/ CFO (x)
    Tata Motors-3.380.41-19.13-0.25-3.74-0.79-0.17-4.20-34.880.851.583.74
    Maruti Suzuki57.562.6211.4813.608.923.899.407.34187.950.750.000.03
    M&M-84.550.790.317.650.074.399.08-1.43-1.151.191.56-43.09
    Ashok Leyland-57.361.624.3211.100.88-1.3711.802.081.151.032.0742.15
    Force Motors-50.860.492.555.351.61-0.333.801.8938.081.130.120.57
    Add More
    Annual Ratios (%)

    Choose from Peers

      Choose from Stocks

      Shareholding Patterns

      • Category30 Sep 202030 Jun 202031 Mar 202031 Dec 2019
        Promoters42.3942.3942.3942.39
        Pledge3.953.953.953.95
        FII15.8415.6216.8418.32
        DII13.0513.2313.4214.88
        Mutual Funds5.606.216.147.29
        Others28.7228.7627.3524.41
      • CategoryNo. of SharesPercentage% Change QoQ
        Promoters1,30,95,51,13842.39 %0.00
        Pledge5,17,29,0003.95 %0.00
        FII48,91,39,77015.84 %0.22
        DII40,35,78,67013.05 %-0.18
        MF17,30,58,8815.60 %-0.61
        Others88,67,04,31628.72 %-0.04

      Mutual Funds Ownership

      MF Ownership as on 31 October 2020

      Futures & Options

        • Expiry Month
        DatePrice

        27-09-2020Current

        185.551.10 (0.60%)

        186.05
        Open
        186.70
        High
        183.80
        Low
        184.45
        Prev Close
        11,325
        Contracts Traded
        63,001.45
        Turnover (₹ Lakhs)
        • Type
        • Expiry Month
        • Strike Price
        DatePrice

        27-09-2020Current

        0.00-34.30 (-100.00%)

        0.00
        Open
        0.00
        High
        0.00
        Low
        34.30
        Close
        0
        Contracts Traded
        0.00
        Turnover (₹ Lakhs)

      Corporate Actions

      • Board Meeting

        Quarterly Results

        Oct 08, 2020

        Board Meeting

        Quarterly Results

        Jul 28, 2020

        General Meeting

        (Revised)

        Jun 30, 2020

      • Announced onMeeting on
        Oct 08, 2020Oct 27, 2020
        Quarterly Results
        Jul 28, 2020Jul 31, 2020
        Quarterly Results
        May 29, 2020Jun 15, 2020
        Audited Results
        Jan 22, 2020Jan 30, 2020
        Quarterly Results
        Oct 18, 2019Oct 25, 2019
        Quarterly Results & Others
      • Announced onEx-DateDividend%
        Jun 14, 2001-0%
        Jun 05, 2002Jul 03, 20020%
        May 27, 2003Jun 30, 200340%
        May 26, 2011Jul 19, 2011200%
        May 30, 2016Jul 18, 201610%
      • Announced onEx-Date
        Sep 28, 1995Oct 04, 1995
        Bonus Ratio: 3 share(s) for every 5 shares held
        Apr 29, 1977-
        Bonus Ratio: 1 share(s) for every 5 shares held
        Apr 29, 1979-
        Bonus Ratio: 2 share(s) for every 5 shares held
        Apr 29, 1982-
        Bonus Ratio: 2 share(s) for every 5 shares held
      • Announced onEx-Date
        May 26, 2011Sep 12, 2011
        Split: Old FV10.0| New FV:2.0
        Jan 03, 1996-
        Split: Old FV100.0| New FV:10.0
      • Announced onEx-Date
        Jan 27, 2015Apr 06, 2015
        Rights ratio: 6 share for every 109 held at a price of Rs 450.0
        May 28, 2008Sep 09, 2008
        Rights ratio: 1 share for every 6 held at a price of Rs 340.0
        May 29, 2008Sep 09, 2008
        Rights ratio: 1 share for every 6 held at a price of Rs 305.0
        Jun 15, 2001Aug 29, 2001
        NA
      • Announced onMeeting on
        Jun 30, 2020Aug 25, 2020
        (Revised)
        Jun 30, 2020Aug 11, 2020
        -
        Jun 29, 2019Jul 30, 2019
        -
        Jun 28, 2019Jul 30, 2019
        -
        Jun 15, 2018Aug 03, 2018
        -

      About

      Tata Motors Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 57099.68 Crore) operating in Auto sector.

      Tata Motors Ltd. key Products/Revenue Segments include Motor Vehicles which contributed Rs 36583.83 Crore to Sales Value (83.28 % of Total Sales), Spare Parts & Others which contributed Rs 4505.79 Crore to Sales Value (10.25 % of Total Sales), Miscellaneous Goods which contributed Rs 1927.98 Crore to Sales Value (4.38 % of Total Sales), Sale of services which contributed Rs 468.16 Crore to Sales Value (1.06 % of Total Sales) and Other Operating Revenue which contributed Rs 442.41 Crore to Sales Value (1.00 % of Total Sales)for the year ending 31-Mar-2020.

      For the quarter ended 30-09-2020, the company has reported a Consolidated sales of Rs 52839.02 Crore, up 67.84 % from last quarter Sales of Rs 31481.86 Crore and down -18.41 % from last year same quarter Sales of Rs 64763.39 Crore Company has reported net profit after tax of Rs -348.16 Crore in latest quarter.

      The company’s top management includes Dr.Ralf Speth, Mr.Guenter Butschek, Mr.N Chandrasekaran, Mr.Om Prakash Bhatt, Mr.Ratan N Tata, Ms.Hanne Sorensen, Ms.Vedika Bhandarkar. Company has BSR & Co. LLP as its auditors. As on 30-09-2020, the company has a total of 3,088,973,894 shares outstanding.

      About Tata Motors

      Tata Motors Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 57099.68 Crore) operating in Auto sector. Show More

      Key Indices Listed On

      Nifty 50, Nifty 100, Nifty 200, Nifty 500, S&P BSE 500

      Address

      Bombay House,24, Homi Mody Street,Mumbai, Maharashtra - 400001

      Executive Leadership

      GB

      Guenter Butschek

      CEO
      GB

      Guenter Butschek

      Managing Director & CEO
      HK

      H K Sethna

      Co. Secretary & Compl. Officer
      HK

      H K Sethna

      Secretary
      Show More

      Auditors

      BSR & Co. LLP

      Tata Motors Share Price Update

      Tata Motors Ltd. share price moved up by 0.68% from its previous close of Rs 183.60. Tata Motors Ltd. stock last traded price is 184.85

      Share PriceValue
      Today/Current/Last184.85
      Previous Day183.60

      DATA SOURCES: TickerPlant (for live BSE/NSE quotes service) and Dion Global Solutions Ltd. (for corporate data, historical price & volume, F&O data). Sensex & BSE Quotes and Nifty & NSE Quotes are real-time and licensed from BSE and NSE respectively. All timestamps are reflected in IST (Indian Standard Time).

      DISCLAIMER: Any and all content on this website including tools/analysis is provided to you only for convenience and on an “as-is, as- available” basis without representation and warranties of any kind. The content and any output of such tools/analysis is for informational purposes only and should not be relied upon or construed as an investment advice or guarantee for any specific performance/returns advice or considered as recommendation for the purchase or sale of any security or investment. You are advised to exercise caution, discretion and independent judgment with regards to the same and seek advice from professionals and certified experts before taking any decisions.

      By using this site, you agree to the Terms of Service and Privacy Policy.

      Markets Data

      *

      Key Metrics

      • This is a ratio arrived at by dividing the current market price of a stock by its latest (annual or annualized) earnings per share. Here we have taken the TTM (trailing twelve months) adjusted earnings per share.

      • Earnings per share (TTM) tells the profit after tax earned on a per share basis by a stock over the last twelve months or four quarters.

      • MCap or Market capitalization of a stock is calculated by multiplying the total number of shares outstanding of that particular stock with its current market price.

      • This is the ranking of a company within its sector based on MCap or Market capitalization. Higher the market capitalization of a company, higher the rank it is assigned.

      • Price to Book represents the ratio of current market price of a stock to its book value per share. The book value itself is arrived at by dividing the net worth of a company by the total number of shares outstanding of the company at that time.

      • Dividend Yield calculates the amount of full year dividend declared by a company as a percentage of the current market price of a stock. All other things being equal, higher the dividend yield of the stock, the better it is for investors.

      • Face value of a stock is the value ascribed to the stock as per the balance sheet of the company. The dividend declared by a company is usually declared as a percentage of face value.

      • Beta (β) is a measure of systematic risk. It describes the responsiveness of a stock to fluctuations in the market. Beta coefficient of more than 1 denotes that a security is more volatile than its benchmark and less than 0 signifies that security return is not correlated to market movement.

      • Volume Weighted Average Price represents the average price of a security over a particular time period (example one trading day) weighted by the volume traded at each price point.

      • This represents the 52 week high and low price of the security. It is also the 1 year high and low of the security. This represents the highest and lowest price touched by the security during the past 52 weeks or 1 year including today.

      • Book value represents the value arrived at by subtracting the total liabilities from the total assets of the company. On dividing this value with the total number of shares outstanding for the company, we can arrive at book value per share. Book value is also known as Net Asset Value of a company.

      • This is a ratio of market capitalisation of a company’s stock to its annual sales. The market capitalization here is taken for the fully paid-up equity share of the company.

      Technicals

      • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

        Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

        Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      • Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

        Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

      • Pivot points are indicative support and resistance levels which are calculated on basis of previous day’s high, low and closing prices. Pivot level for Monday’s trade would be based on Friday’s prices and Monday’s, high, low and close price would go into calculation of pivot levels for Tuesday’s trading session.

        There are two underlying assumptions in pivot points. First, the specific price level indicated by R1, R2 and R3 may act as a barrier or resistance in an uptrend. So, if a stock moves up above these pivots levels, the uptrend gets confirmed. Second these specific price levels may see an increased activity, hence may be used as levels to book profit by traders with a long positions. For traders with short position, these points are often helpful in determining what should be the stop loss for a trade.

        Similarly, in case of support levels as indicated by S1, S2 and S3, they may act as price level where a stock might get a breather when it is slipping southward. In case these supports levels are broken it is a confirmation of a down trend. The stock may also see increased activity close to pivot levels. They may be used by trader may use them to put stop loss for a long trade. If a trader has short position, the pivot level may help in determine a level, where profit may be booked.

        Like any other technical indicator, pivots levels cannot and should not be used as single factor while taking a trading decision. They should be combined with other technical indicators. It could be short term moving averages, stochastic, moving average convergence divergence (MACD) or overbought level as indicated by relative strength index (RSI). For example, if a breakdown of support level (S1, S2 or S3) is accompanied with stock price also moving below its short term moving average or stochastic on daily charts giving a sell signal, it would add to weightage to the decision of taking a short trade.