According to Nuvama's latest Diwali Picks 2026 report dated November 2, the brokerage presents a constructive outlook for Indian equities with the central theme of 'A year of Revival and Re-rating – Samvat 2083'. The report notes that Samvat 2082 was described as 'A Year of Correction, Consolidation & Divergence' with persistent FII selling, elevated short positions in index futures, and uncertainty surrounding global trade weighing on Indian equities. However, corporate earnings remained relatively resilient even as market valuations corrected towards multi-year lows, improving the risk-reward profile for investors entering the new Samvat year. The brokerage highlights that lower valuations and extreme FII short positioning could create room for a recovery if favourable triggers emerge, with the Nifty 50's trailing P/E ratio at around 19 times as of October 31, 2026, among its lowest readings since 2022.
As reported by Nuvama, the brokerage has identified 5 Diwali stock picks for Samvat 2083 based primarily on technical indicators including chart breakouts, moving averages, support levels and relative strength. The recommendations include Adani Energy Solutions with a three-year consolidation breakout retest showing positive crossover of 50-week moving average, Coforge demonstrating relative strength with highest-ever weekly and monthly closes and strong reversal from 200-week moving average, KDDL breaking out from 30-month symmetrical triangle consolidation, Punjab National Bank approaching crucial technical breakout above 15-year downward resistance trendline, and Zydus Lifesciences maintaining higher lows over 15-18 months with fresh breakout from five-month consolidation. These selections reflect Nuvama's technical approach focusing on price structures, breakout levels, moving averages, and Fibonacci retracements.
According to Nuvama's analysis, IT, public-sector banks and pharmaceuticals are highlighted as preferred sectors for Samvat 2083. The IT sector shows early signs of recovery after prolonged underperformance, with recent quarterly results generally encouraging and Indian IT companies potentially benefiting from global rotation away from expensive AI-focused stocks. PSU banks are supported by healthy credit growth, improving asset quality, and reasonable valuations relative to improved return-on-equity profiles. Pharmaceuticals demonstrate relative strength with healthy domestic demand in chronic therapies and resilient earnings among leading companies, though US generic pricing pressure remains a key risk factor requiring selective stock selection. The brokerage identifies five potential catalysts for market resurgence including India-US trade deal progress, global shift away from expensive AI stocks, diplomatic resolution involving Iran, domestic policy measures like capital gains tax relief, and correction in gold and silver prices.
According to Nuvama's technical analysis, extreme FII short positioning in index futures has reached historically bearish levels, with nearly one lakh short contracts covered from peak levels indicating initial shift in positioning. The Nifty in US-dollar terms is approaching important technical support coinciding with the lower boundary of a declining channel and 2023 breakout level retest. The index has shown positive RSI divergence with the indicator failing to confirm weakness suggested by fresh price lows. Adani Energy Solutions demonstrates encouraging signs of structural trend reversal after breaking out of three-year consolidation in April 2026, while Coforge shows strong relative performance with reversal from 200-week moving average. KDDL exhibits bullish technical setup following breakout from 30-month symmetrical triangle, and Zydus Lifesciences maintains series of higher lows over 15-18 months with fresh breakout from five-month consolidation.
