How can one invest in Tata Motors and Tata Power in SIP mode considering the current market situation?

Let us take the two stocks mentioned and look at their last 1-year performance

Tata Motors

The share price has corrected by ~17%

Performance of Tata Motors Stock in the past year

Considering this, few things can be stated for Tata Motors:

  • This stock will be under pressure owing to the high price of commodities and turbulent semiconductor supply chain
  • Tata Motors overall revenues will be flat as Jaguar Land Rover (JLR) sales will be impacted by recession like situation in Europe and uncertainties in China owing to Covid-19
  • With high inflation and rising interest rates, the domestic market may see muted growth in the coming quarters

Iconic Brands under the Tata Motors Umbrella

Tata Power

The share price has flat return of ~2.3%

Performance of Tata Power Stock in the past year

Considering this, few things can be stated for Tata Power:

  • Rising Coal prices will eat into the profit margin of utility services
  • With lower liquidity, the appetite for Green Bonds might be lower, a vehicle chosen to raise money for renewable energy projects
  • With rising commodity prices, the cost of solar panels will be an important consideration for ongoing & future projects

Tata Power Solar: Arm of Tata Power

Now coming to the question,

How can one invest through the SIP Route in Tata Motors & Tata Power?

  1. Both the companies have carved a niche for their product/service and this is meant to give a returns when the global situation settles down. Considering this, SIP Route for regular buying of these stocks is a well graded approach
  2. Both the stocks are more than 10% down from their highs and this seems to be a good entry point for an investor
  3. An investor can follow a 20–30–30–20 approach.
    1. 20% of Capital at +/- 5% through monthly SIP
    2. 30% of Capital (10% Appreciation) at -10% through monthly SIP
    3. 30% of Capital (10% Appreciation) at -10% through monthly SIP
    4. 20% of Capital (20% Appreciation) at -5% through monthly SIP
  4. Till the correction/appreciation is +/- 5% from the current value, an investor can keep deploying 20% of the earmarked capital

Kindly note, this is not a recommendation but an answer to the query that has put across

Hope this helps

You can follow my blog or Facebook page on investing for getting insight into other stocks.

Happy Investing!!

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