'Sell in May' not a good approach in 2026, says tech analyst Ajit Mishra

Nifty may remain rangebound in near-term; investors may prefer a calibrated strategy - staying invested while selectively booking profits in overheated stocks, says Ajit Mishra of Religare Broking.

Ajit Mishra, SVP Research at Religare Broking believes the recent pullback in Nifty reflects improving sentiment, but YTD losses suggest uncertainties persist; hence, he advocates a calibrated trading approach in the current market.  The analyst in an emailed interview to Rex Cano decodes investment strategies in key sectors such as IT, banking and energy and sheds insights on key stocks to buy in 2026.

The Nifty bounced back by 7.5 per cent in April, but is still down over 8 per cent on a YTD basis. Do you expect the pullback to continue, or should investors sell in May and go away?

The recent rebound in the Nifty reflects improving sentiment after a weak start to the year, yet it remains 8 per cent lower on a YTD basis, indicating that underlying uncertainties persist.  The evolving West Asia crisis now appears to move towards a temporary stalemate and has eased immediate concerns around crude prices. However, risks remain from global interest rate trajectories, intermittent geopolitical flare-ups, and earnings visibility in certain sectors.  Given this mixed backdrop, the pullback may sustain in the near term but could remain range-bound. Rather than a blanket 'sell in May' approach, investors may prefer a calibrated strategy—staying invested while selectively booking profits/ exit in overheated pockets and underperforming sectors.  READ | Oil above $100, Iran war drags: Should investors 'Sell in May' or stay put? 

How are you approaching the information technology sector? Is any stock worth investor's money at the current market price (CMP)?

We maintain a neutral stance on the IT sector. While valuations have corrected and appear reasonable versus historical averages, growth visibility remains uncertain. AI-led disruption is reshaping the industry—automation across coding, testing, and maintenance is impacting traditional outsourcing revenues, leading to slower deal conversions and pricing pressure.  Given this, we believe it is prudent for investors to stay on the sidelines and wait for clearer demand recovery and execution on AI-driven opportunities. 

What's your preference between the private and PSU banks? Do you expect Nifty Bank to remain under pressure amid the West Asia war's impact on the economy?

We do not have a structural preference between private and PSU banks; our approach remains stock-specific, driven by earnings growth, asset quality, and valuations. On Nifty Bank, the outlook remains range-bound in the near term. 

What are your 3 contrarian buy ideas and what is the likely upside in the next 12 months?

The ongoing West Asia crisis is bringing energy security into sharper focus, and we believe this theme is gaining structural relevance with multiple tailwinds such as rising power demand, renewable integration, and continued policy support.  Within this, Power Finance Corporation offers strong earnings visibility and trades at attractive valuations, with potential 12–15 per cent upside. Power Grid Corporation of India remains a steady compounder benefiting from transmission capex and offers 12–18 per cent upside. Meanwhile, Inox Wind is a turnaround play with improving execution and policy tailwinds, with 20–30 per cent upside, albeit with higher volatility.  READ | Cutting Sensex, Nifty targets now is premature: Harendra Kumar, Elara Capital 

What about consumer durables, especially the cooling product makers?

The cooling products segment is seeing early signs of demand recovery after a phase of heightened competition and weak demand. While growth prospects are improving with premiumization and seasonal demand, valuations remain relatively elevated. We are positive on the long-term opportunity but prefer to wait for better entry points. 

Where are we in the commodity cycle? Are there any metal stocks that interest you?

Pinpointing the exact stage of the commodity cycle is difficult, but it does not appear to be at a peak yet. Ongoing de-globalisation and re-shoring efforts are driving incremental demand for metals and resources, while rising geopolitical uncertainties are adding supply-side constraints.  Among stocks - Hindalco, Hindustan Zinc, Jindal Steel and JSW Steel look promising and can potentially gain 8-15 per cent in short to medium term perspective.  READ | Tata Chem, Crompton among 3 stocks with up to 22% upside potential: Analyst 

For someone beginning their investing journey, what are the top 3 technical indicators that they should track while evaluating a stock, and why?

For beginners, the most effective approach is to start with the basics—price and volume—as they reflect the true action of the market. Price structure helps identify trends, key levels, and market behavior, while volume validates the strength of any move; rising prices with strong volume indicate genuine buying interest, whereas weak volume can signal lack of conviction.  Building on this, exponential moving averages (such as 20, 50, or 200 EMA) provide dynamic support and resistance levels and help define the trend direction and momentum. When price sustains above key EMAs, it indicates strength, while repeated rejections highlight weakness. Together, price, volume, and EMAs offer a simple yet powerful framework to assess trend, momentum, and participation without overcomplicating analysis.  Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers' discretion is advised.  Click here for brokerage/ analyst disclaimer/ disclosure.