Quality stocks tend to rebound to levels where long-term investors have traditionally had confidence after a steep correction. These zones are not just price levels, but they are firm support, where buying demand has consistently overwhelmed selling pressure.
When we see a stock bouncing off of such support and momentum indicators start turning positive as well, it makes for a potential high probability technical setup to follow.
And this is what is happening in Persistent Systems and Mphasis.
Both the madcap IT stocks have corrected sharply from their highs and are showing positive signs of recovery. Most importantly, both have broken out of long-term support levels that have been respected in the past few years. The Relative Strength Index (RSI) is improving and the MACD is showing signs of a bullish momentum shift which adds to the optimism.
Price support coupled with improving momentum doesn’t assure an uptrend, but it certainly increases the odds for a meaningful reversal if buyers remain in control.
Persistent Systems: Bulls Keep Charging At Long-Term Support
Persistent Systems has once again proved why the Rs.4,000-Rs.4,400 zone is one of its most important long-term support areas.
The stock has tested this range three times in the one year. Buyers have always been aggressive enough to hold a deeper correction at bay. The stock has already rallied almost 8% on the weekly chart from the recent bounce, pointing to the strength in demand at these levels.
Additionally, the 200WEMA (Weekly Exponential Moving Average) is adding a layer of long-term support.
Momentum indicators are also supporting the rally. The weekly RSI has crossed above its moving average and trades around 48. The indicator is about to turn bullish above 50 but the recent strength suggests that buying momentum is gradually coming back.
The MACD histogram is also tightening up after a long period of weakness. Such behaviour is common in the early stages of a trend change when selling pressure begins to ease before a larger uptrend develops.
If Persistent Systems sustains above the Rs.4,000-Rs.4,400 support zone, then the stock can be on the verge of a potential long-term recovery. A decisive change for the better in momentum could further help the bullish case in the coming weeks.
Mphasis: Momentum Seems Even Stronger
The stock price of Mphasis has been consistently finding buying support around the Rs.2,000 mark for almost three years now. This level was able to prevent falls in 2023, in the correction early 2025, and again in 2026.
The fact that there are multiple tests of the same price zone makes it a technically significant support level and a key area to watch going forward.
The momentum indicators are also giving some positive signals. The weekly RSI has crossed above its moving average and trades around 48. The indicator is on verge of turning bullish above 50 but the recent strength suggests that buying momentum is gradually accelerating.
The MACD histogram is also tightening up after a long period of weakness. Such behaviour is common in the early stages of a trend change when selling pressure begins to ease before a larger uptrend develops.
As long as Mphasis trades above the Rs.2,000 support zone, the stock has the potential to attract fresh buying interest. If the broader market environment continues to be supportive, a sustained move higher could provide a catalyst in terms of a larger trend reversal.
Are You Adding These Stocks to Your Watchlist?
The Indian IT sector has seen a massive correction in the last few months. But corrections often present buying opportunities in fundamentally strong businesses, particularly as the technical evidence begins to improve.
Traders and investors are now watching closely a combination from Persistent Systems and Mphasis which has strong long-term support, improving RSI and Positive MACD signals.
Both these stocks deserve a place on the watchlist for those looking to build exposure to quality IT names. If momentum continues to build and they remain above their respective support zones, these could potentially be the next bullish phase.
Source: Financial Express
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