In a significant turnaround, shares of Avenue Supermarts, the operator of the popular DMart retail chain, witnessed a powerful surge during Wednesday's trading session on January 7. The stock climbed a sharp 5% to hit an intraday high of ₹3,844.70 per share. This impressive jump represents the company's most substantial single-day gain since the middle of August 2025, providing a much-needed breather to its investors.
Heavy Trading Volume and a Break from Selling Pressure
The rally was accompanied by exceptionally high trading activity. On the Bombay Stock Exchange (BSE), a substantial 82,000 shares of DMart were traded by 2:40 pm, which is more than double the two-week average of 39,000 shares. The National Stock Exchange (NSE) saw an even larger volume, with 11.54 lakh shares changing hands.
This positive movement comes as a relief after a period of sustained selling pressure. The stock had been declining since it reached a one-year peak of ₹4,949 in September. The sell-off intensified last week following the company's December quarter (Q3FY26) business update, which pushed the share price to its lowest point since March 2025.
Decoding the Q3FY26 Performance and Brokerage Views
The trigger for the recent weakness was the quarterly update released last Friday. For the quarter ending December 2025, the Radhakishan Damani-owned retailer reported standalone operational revenue of ₹17,612.62 crore. This reflects a year-on-year growth of 13.15% from ₹15,565.23 crore in the same period last fiscal.
While this indicates double-digit growth, the momentum has slowed compared to the 16% and 15% increases seen in the first two quarters of FY26. This performance fell short of market expectations. Leading domestic brokerage firms, JM Financial and Motilal Oswal, had estimated a revenue growth of around 17%.
On the expansion front, DMart added 10 new stores during the quarter, bringing the total additions for FY26 to 27 and the overall count to 442 stores across India. Motilal Oswal highlighted that in the face of intense discounting from quick-commerce players, store expansion will remain a key growth driver. The brokerage projects 60 net new store additions for FY26, up from 50 in FY25.
However, analysts foresee continued challenges. Motilal Oswal expects gross margin pressure to persist in the medium term. JM Financial anticipates a flat gross margin, estimating a 40-basis-point dip year-on-year to 7.5% for Q3FY26, largely due to negative operating leverage. It forecasts an 8% YoY growth in EBITDA to ₹1,330 crore (₹13.3 billion) and a 3% rise in net profit to ₹810 crore (₹8.1 billion).
Technical Outlook and Market Sentiment
The stock's journey has been volatile. From its September high of ₹4,949, it has shed 23% of its value. This followed a strong 40% rally between February and August 2025. For the full calendar year 2025, the stock managed a modest gain of 6.20%, recovering from a 12.8% drop in 2024. It currently trades 35.2% below its all-time high of ₹5,900.
Commenting on the technical structure, Anshul Jain, Head of Research at Lakshmishree, noted that DMart had been range-bound for about 22 weeks, trending lower for 18 consecutive weeks and correcting over 27% from recent highs. He interprets this prolonged decline as a sign of selling exhaustion.
"The structure now shows early signs of stabilisation, with the last four sessions printing clear institutional long-side volumes, hinting at accumulation at lower levels," Jain stated. He added that while momentum on higher timeframes remains weak, conditions are ripe for a mean reversion. "A sharp technical pullback toward the 4100 to 4200 zone appears increasingly likely as short covering and value buying kick in. This move should be viewed as a counter-trend bounce, not a trend reversal," he concluded.
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