Diwali stock picks 2026: The Indian stock market is entering Samvat 2083 after a year of correction, consolidation and divergence across market segments. Persistent foreign institutional investor (FII) selling, global trade uncertainty and geopolitical tensions weighed on sentiment in Samvat 2082, even as corporate earnings remained relatively supportive.
However, Nuvama Wealth’s Technical Desk believes the risk-reward for Indian equities is improving, supported by attractive valuations, extreme bearish positioning among foreign investors and potential triggers for a recovery. In its Diwali Picks 2026 report, the brokerage identified five stocks — Adani Energy Solutions, Coforge, KDDL, Punjab National Bank and Zydus Lifesciences — based on their technical structures and potential for further gains.
Nuvama Diwali Picks 2026: Five stocks and their rationale
1. Adani Energy Solutions
Nuvama identified Adani Energy Solutions as a potential structural turnaround candidate after the stock broke out of a three-year consolidation phase in April 2026. It was retracing towards its 50% Fibonacci level, which coincided with the previous breakout zone. The weekly chart also showed a positive 50-week moving average crossover, strengthening the bullish setup. The brokerage believed the retest of the breakout area could offer an attractive risk-reward opportunity.
“The ongoing retest offers an attractive risk-reward opportunity,” said Nuvama.
2. Coforge
Coforge featured in the list because of its exceptional relative strength and improving price structure. The stock registered its highest-ever weekly and monthly closing levels after staging a strong reversal from its 200-week moving average, a historically important support zone. Nuvama also highlighted that Coforge held above its previous lows even when the broader index made fresh lows in July. This relative resilience suggested underlying strength and the brokerage believed the stock could lead the IT pack going forward.
As per the brokerage, “This can lead the IT pack going forward.”
3. KDDL
KDDL displayed a bullish technical setup after breaking out of a 30-month symmetrical triangle consolidation. Nuvama noted that the breakout followed a strong reversal from the stock’s 200-week moving average. After a sharp rally, the stock was retesting its earlier resistance zone, which had turned into support. The brokerage also identified a broader pole-and-flag formation. The breakout and subsequent retest suggested the possibility of another leg of upside, while the change in polarity strengthened the technical outlook.
4. Punjab National Bank
Punjab National Bank was approaching a crucial technical breakout, with its monthly chart testing a 15-year downward-sloping resistance trendline. Nuvama identified a compressed symmetrical triangle formation, characterised by progressively lower highs and higher lows. On the weekly chart, another symmetrical triangle had been developing since June 2024. A strong reversal from the 50% Fibonacci retracement and sustained higher lows indicated improving buying interest. A decisive breakout could trigger a significant long-term trend reversal, according to the brokerage.
The report noted: “Sustained higher lows indicate improving buying interest.”
5. Zydus Lifesciences
Zydus Lifesciences demonstrated strong technical momentum, supported by a series of higher lows over the preceding 15–18 months. Following an 18-month price breakout in April, the stock registered its highest-ever quarterly closing in September. Nuvama also highlighted a breakout from a five-month consolidation range, accompanied by its highest weekly closing in two years. Its relative strength against the Nifty Pharma index was approaching 2024 highs, indicating renewed sectoral leadership and sustained institutional interest.
Why Nuvama sees potential for a market recovery
Apart from its five stock selections, Nuvama identified several potential catalysts for Indian equities in Samvat 2083. These included a possible India-US trade deal, easing geopolitical tensions involving Iran, a global rotation away from expensive AI-linked stocks and a correction in precious metals that could redirect liquidity towards equities.
The brokerage also highlighted extreme bearish positioning among FIIs in index futures. It noted that nearly one lakh short contracts had already been covered from peak levels, suggesting early signs of a shift in positioning. Nuvama argued that the remaining short positions could amplify a market recovery if a positive domestic or global trigger emerged.
Valuations were another positive. The Nifty 50’s trailing price-to-earnings ratio was hovering around 19 times, among the lowest levels since 2022. Nuvama said the historical 19–20 times P/E zone had attracted buying interest, potentially offering a favourable risk-reward opportunity for long-term investors.
The brokerage also highlighted the bullish structure of its equal-weighted Diwali 2026 basket, which had broken out of a multi-year ascending triangle formation and successfully retested the breakout zone.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
