Alert issued: Two artificial intelligence stocks exhibit signs indicating contrarian investment opportunities
Amidst the turbulence in the Indian IT sector, two stocks have stood tall - Affle India and Mphasis. Both companies show promising technical and fundamental potential for growth in the Indian IT sector, defying the current market headwinds.
Affle India's Bullish Technical Indicators
Affle India's stock has displayed a notable resilience, forming a rounded bottom pattern from December 2024 to June 2025 and breaking out in June. This technical indicator is considered bullish. The stock is currently trading above its 200-day moving average (200 DMA), another positive sign.
Price action accompanied by rising volume and a Relative Strength Index (RSI) above 55 with bullish divergence further supports a potential upward price movement. Over the past 6 months, Affle's share price has increased by about 30.77%, and over the last year, it has grown by 29.68%. Analysts rate the company as a long-term "Buy", and its market capitalization stands strong at around ₹27,588 crore.
Mphasis' Bullish Fundamentals and Technical Signals
Mphasis, on the other hand, has managed to overcome a 36% decline earlier this year by breaking out of an inverted head-and-shoulders pattern, a bullish reversal signal. The stock is currently testing support levels at the 200 DMA, with its RSI still in a strength zone, indicating the likelihood of further upward moves.
Mphasis reported strong Q1 FY26 results with revenue of ₹3,137.68 crore and PAT of ₹404.65 crore. The company has also made strategic acquisitions to bolster its AI, cybersecurity, and software testing capabilities. Mphasis targets an improved EBIT margin of 14.75%–15.75% for FY26, driven largely by AI solutions and record contract wins worth $760 million, 68% of which are AI-related. As of August 16, 2025, its share price is ₹2,712.3, with significant growth potential given its AI-driven business focus and improving financials.
The Turnaround of the IT Sector
It's worth noting that the sector turned around its performance for the better starting from April 2025. However, the Indian IT sector struggled in 2025 from January to July, posting negative returns of over 20% at the index level. Despite this, both Affle India and Mphasis have managed to navigate these challenging times and show promising growth prospects.
Investors should, however, remain mindful of overall market headwinds affecting the Indian IT sector and continue monitoring for confirmation of sustained upward trends. The potential growth of Affle India and Mphasis, driven by their technical strength and fundamental drivers, particularly AI adoption and contract growth for Mphasis, suggests a positive outlook for these companies.
- Amidst the volatility in the Indian IT sector, Affle India's stock has shown a remarkable resilience with a rounded bottom pattern from December 2024 to June 2025, breaking out in June, indicating a bullish technical indicator.
- The trading of Affle India's stock has shown significant growth potential, with its current price above its 200-day moving average (200 DMA) and a potential upward price movement supported by rising volume and a Relative Strength Index (RSI) above 55 with bullish divergence.
- Mphasis, on the other hand, has managed to reverse its decline earlier this year by breaking out of an inverted head-and-shoulders pattern, another bullish technical signal, and is currently testing support levels at the 200 DMA.
- Mphasis' strong Q1 FY26 results, strategic acquisitions in AI, cybersecurity, and software testing capabilities, and targets for an improved EBIT margin and record contract wins for FY26 suggest a bullish outlook for the stock.
- Despite the turbulence in the Indian IT sector in 2025, both Affle India and Mphasis have shown promising results and growth prospects, defying market headwinds.
- Investors should continue monitoring the market headwinds affecting the Indian IT sector and consider the potential growth of Affle India and Mphasis, driven by their technical strength and fundamental drivers, particularly AI adoption and contract growth for Mphasis, when making investment decisions in the stock-market sector.
