The IT sector, which delivered a negative return of nearly 32% over the past 12 months, is finally showing signs of recovery. After a prolonged correction phase, the last three months have witnessed improving price action and accumulation patterns. With the broader market trading at all-time highs and sentiment turning positive, select IT stocks are displaying technical strength and signalling a potential turnaround. Tata Consultancy Services (TCS) and Infosys (INFY) have formed bullish reversal patterns on their daily charts, offering actionable opportunities for traders and investors.
TCS – A bullish reversal breakout
TCS was among the worst performers, declining sharply by 36% from its December 2024 peak of ₹4,500 to a low of ₹2,866. However, the current technical structure suggests renewed buying interest and the possibility of a trend reversal.
Key Indicators Supporting TCS’s Strength:
- Bullish Chart Pattern Breakouts: The stock has formed key bullish reversal patterns such ascending triangle and trading above breakout level.
- Trading Above 100 SMAs: TCS is now trading and sustaining above its 100-day Simple Moving Averages (SMAs) for the first time since December 2024, indicating a potential trend shift.
- Volume Surge Confirming Breakout: A simultaneous rise in price and volume suggests strong participation, validating the upward momentum.
- Strengthening RSI Momentum: The 14-period Relative Strength Index (RSI) above 60 indicates bullish divergence and potential for further upside.
Outlook: TCS
After a steep correction, the share price of TCS is showing early signs of recovery. The breakout from an ascending triangle pattern, coupled with price sustaining above 100 days simple moving averages and rising volumes, suggests accumulation. The 14 period RSI momentum indicators also points toward the possibility of a fresh rally in the coming weeks.
INFY – Bullish Reversal in Play
The share price of INFY corrected nearly 35% from December 2024 to April 2025, hitting a low of ₹1,307. Since then, the stock has consolidated and is now breaking out of a time-correction phase with bullish signals on the daily chart.
Key Indicators Supporting INFY’s Strength:
- Chart Pattern Breakout: The stock has broken out from ascending triangle, reinforcing bullish sentiment.
- Volume Surge: Rising price accompanied by increased volume suggests substantial accumulation and confirms the breakout.
- Trading Above 100 SMAs: INFY is now trading and sustaining above its 200-day Simple Moving Averages (SMAs) for the first time since November 2024, indicating a potential trend shift.
- RSI Gaining Strength: The 14-period RSI above 55 indicates improving momentum and potential for further gains.
Outlook: INFY
The past year has been challenging for INFY, with the stock correcting from ₹2,006 to ₹1,307. INFY’s price action post its panic low suggests a base-building phase. The breakout from a bullish reversal pattern, supported by rising RSI and sustained price above long-term 100 days simple moving averages, indicates a favorable risk-reward setup for medium-term traders.
Final Take
The broader market’s strength and improving sentiment are creating a conducive environment for sector rotation. IT, after a year-long underperformance, is showing credible reversal signals. TCS and INFY stand out with strong technical setups—ascending triangle breakouts, sustained price above key moving averages, volume confirmation, and strengthening RSI.
Disclaimer:
Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Kiran Jani has over 15 years of experience as a trader and technical analyst in India’s financial markets. He is a well-known face on the business channels as Market Experts and has worked with Asit C Mehta, Kotak Commodities, and Axis Securities. Presently, he is Head of the Technical and Derivative Research Desk at Jainam Broking Limited.
Disclosure: The writer and his dependents do not hold the stocks discussed here. However, clients of Jainam Broking Limited may or may not own these securities.
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