The analyst cautioned that repeated rejections near ₹4,800–₹5,000 and fading volume strength could signal an early-stage breakdown if key supports fail.
Avenue Supermarts (DMart) shares slipped 1.8% on Monday after the company posted a modest 3.85% year-on-year rise in consolidated net profit to ₹684.85 crore for the second quarter (Q2) of FY26.
The retail chain’s profit margin narrowed slightly to 4.1% from 4.6% a year ago, while revenue from operations grew 15.45% year-on-year to ₹16,676.30 crore.
Fundamental View
SEBI-registered analyst Front Wave Research described DMart as a “great company, priced fairly.” The firm said the retailer remains a long-term compounder, but the near-term risk–reward appears balanced.
At about 60 times EV/EBITDA compared with its long-term average of roughly 70 times, the valuation already reflects more than 10% volume growth and margin stability, it added.
“DMart remains a fundamentally strong business, but valuations are fair at current levels,” Front Wave said, maintaining a neutral stance.
Daily Chart: Momentum Losing Steam
SEBI-registered analyst Rajneesh Sharma said DMart’s chart setup shows early signs of fatigue, even though the stock still appears steady at first glance.
On the daily chart, he pointed out that the stock is trading inside a “rising wedge,” which is a pattern that often hints at a potential breakdown after a gradual climb. The stock is currently hovering around its key support zone between ₹4,250 and ₹4,300.
Sharma explained that On-Balance Volume (OBV), which measures the flow of volume into or out of a stock, has been making lower highs while the price has been making higher highs. He said that signals weak buying participation and hints that traders may be offloading at higher levels.
He also noted a “hidden bearish divergence” on the Relative Strength Index (RSI), a momentum indicator that tracks the strength of price moves.
The RSI is making lower lows while the price makes higher lows, pointing to a sign that underlying momentum isn’t keeping up with the price. The RSI currently stands at 33.29, close to oversold territory, but Sharma said there’s still no clear sign of a rebound.
Weekly Chart: Signs Of Distribution
Looking at the weekly chart, Sharma said DMart has recently slipped below a rising channel, a sign that the medium-term uptrend is weakening. The stock is holding above its next major support at ₹4,102, but trading activity suggests some selling pressure.
He pointed to a Moving Average Convergence Divergence (MACD) crossover forming on the downside, another indicator of fading strength. Volumes have also risen on red candles, suggesting that sellers are becoming more active.
Meanwhile, the RSI has dropped below the neutral 50 mark, reflecting a loss of momentum even though the stock hasn’t seen a major price fall yet.
Meanwhile, Front Wave Research added that the stock continues to consolidate between ₹3,300 and ₹5,300 on weekly charts, keeping it in a “hold zone” until a fresh growth or margin trigger emerges.
Brokerage View
Brokerages were divided on the company’s Q2 numbers. UBS maintained a ‘Buy’ rating with a ₹5,500 price target, calling DMart a “compounding story.” Macquarie, however, retained an ‘Underperform’ rating with a ₹3,100 target, citing concern over declining cash levels.
HSBC lowered its stance to ‘Reduce’ with a ₹3,700 target, pointing to slowing like-for-like growth amid intensifying competition.
Nuvama kept a ‘Hold’ with a ₹4,580 target, saying margin pressure was easing while top-line growth stayed steady. Motilal Oswal (MOSL) reiterated a ‘Buy’ with a ₹5,000 target, expecting 60 new stores in FY26 and suggesting the competitive peak may have passed. Goldman Sachs maintained a ‘Sell’ with a ₹3,370 target, citing weaker sales and a lack of meaningful store expansion so far.
Long-Term View
Sharma said that DMart is still within a broad upward-sloping channel, which means the overall long-term trend remains positive. However, he cautioned that repeated rejections near ₹4,800–₹5,000 show that sellers are stepping in at higher levels.
“The bigger trend is still intact, but the risk of a structural breakdown is rising,” he said, adding that the next key downside zones to watch are near ₹4,100 and ₹3,657 if the stock loses current support.
Trading Call
According to Sharma, a decisive break below ₹4,250 could speed up a drop toward ₹4,100 and then ₹3,657. However, a strong rebound from the ₹4,250–₹4,300 zone, backed by higher trading volumes, could trigger a short-term recovery toward ₹4,595.
He added that the stock would need to close above ₹4,600–₹4,800 for any bounce to turn into a meaningful reversal rather than just a temporary pullback.
What Is The Retail Mood?
On Stocktwits, retail sentiment was ‘neutral’ amid ‘normal’ message volume.
Avenue Supermarts’ stock has risen 19% so far in 2025.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<