Near-term market outlook weak; DRL among 3 stock ideas: Ajit Mishra

Disclaimer: This article is written by Ajit Mishra, SVP-research at Religare Broking. Views expressed are his own. Readers' discretion is advised.

Market View Markets witnessed a sharp reversal on Wednesday, surrendering early gains amid profit booking and persistent macroeconomic concerns. The benchmark indices opened on a positive note, supported by strong buying in IT stocks and Reliance Industries, but selling pressure intensified as the session progressed. Consequently, the Nifty declined 0.88 per cent to close at 22,687.50, slipping below the 22,700 mark and highlighting the fragility of the recent recovery.

On the sectoral front, all sectors, barring IT, ended in the red, with metal, auto and energy emerging among the top laggards. Selling pressure was particularly severe in the broader market, where midcap and smallcap indices declined by around 1.5 per cent to 2.4 per cent, reflecting widespread risk aversion. Global and domestic macroeconomic concerns continued to weigh on sentiment.

Brent crude remained elevated around $110 per barrel amid escalating geopolitical tensions and concerns over potential supply disruptions. Although the rupee has strengthened recently, elevated oil prices, global bond yields and uncertainty surrounding foreign fund flows remain key risks. Meanwhile, the ongoing earnings season continues to drive stock-specific activity, with investors closely tracking corporate results and management commentary.

The selling pressure across key sectors, barring IT, has pushed the Nifty below its short-term moving average, the 20-day exponential moving average (20-DEMA), again weakening the near-term outlook. The 22,200–22,400 zone is the next key support area, while the 23,000–23,300 zone is likely to cap the upside during any recovery. Given elevated crude prices, weak broader-market participation and persistent geopolitical uncertainties, participants should maintain a cautious stance, focus on selective stock-specific opportunities and consider a balanced approach with appropriate positioning on both sides of the market.

Stocks Recommendations by Ajit Mishra Dr. Reddy's Laboratories | LTP: ₹ 1244.5| Recommendation: Buy | Target: ₹ 1335| Stop-loss: ₹ 1197 Dr Reddy’s has maintained its strength following a recovery from its crucial multi-year support zone and reclaimed the 200-EMA. The stock has formed a steady base in a triangular pattern at the bottom of the corrective trend, indicating a potential trend reversal.

The price action reflects stability, and a decisive move above 1,250 could further accelerate the upward momentum. One can consider accumulating the stock within the mentioned range. Coforge | LTP: ₹ 1951| Recommendation: Buy | Target: ₹ 2090| Stop-loss: ₹ 1880 We are witnessing notable strength in IT counters amid broader market volatility, and Coforge is moving in line with the sectoral trend.

The stock has been trading in a steady uptrend and is currently hovering near its record high levels. It has also reclaimed its short- to long-term moving averages across timeframes, supporting the positive momentum. The stock has formed a buying pivot, and one can consider accumulating it within the mentioned range.

Dixon Technologies (India) | LTP: ₹ 11730| Recommendation: Sell Futures | Target: ₹ 11300| Stop-loss: ₹ 11950 Dixon is trading under pressure for the last two months after forming the swing high around 15,000 level. It has been forming lower lows, breaking below the intermediate range formed during a brief pause, indicating sustained selling pressure. Elevated selling volumes further reinforce the negative bias. Considering the technical setup, one can consider going short in the stock through futures as per the mentioned level.