Despite robust manufacturing data, the technology sector weighed down the markets today.
IT Sector Slump on July 24, 2025: A Sector-Specific Correction Amid Strong Economy
In an unexpected turn of events, the Indian stock market experienced a significant drop on July 24, 2025, despite a 17-year high Manufacturing PMI of 59.2 indicating strong manufacturing momentum and robust private sector growth. The primary culprit behind this market rout was the IT sector, particularly Infosys, which slipped despite decent earnings [1].
The Nifty 50 index opened higher due to positive sentiment but dropped nearly 220 points from the day’s high, closing down 0.63%. The IT sector's decline weighed heavily on the overall market performance [1]. This selloff was not driven by macroeconomic data but rather by investor focus on earnings ahead and global trade uncertainties [1].
While new-age tech companies such as Eternal, Paytm, and Ola Electric gained, traditional IT firms like Infosys, Tech Mahindra, and CϪForge saw selling pressure. This could potentially reflect concerns about margins, global business conditions, or rotation out of expensive IT valuations [1].
The India–UK Free Trade Agreement signed on the same day opens new export opportunities for high-tech manufacturing and electronics, which might eventually benefit the IT ecosystem. However, this agreement did not seem to positively impact stock sentiment on the day of the rout [4].
Market participants are now cautious ahead of next week's U.S. Federal Reserve policy decision. Among individual Nifty 50 stocks, Eternal was the top gainer, surging 3.44 percent. However, several other stocks, such as Reliance Industries, Trent, and Shriram Finance, declined significantly [1].
The market breadth was negative, with 2,467 stocks declining against 1,523 advances on the BSE. The Nifty is facing stiff resistance around the 25,250-25,260 zone, and support for the Nifty remains intact at 24,900. The PSU Bank index rallied over 1.40 percent despite a weak market sentiment [1].
Gold prices declined by around $60 and MCX gold dropped nearly ₹1,500. Nestle India plummeted 5.57 percent to ₹2,316.00, and the rupee gave up its initial 0.30 percent gains and settled near 86.40 [1].
In summary, the IT sector selloff on July 24, 2025, occurred amid otherwise positive macroeconomic indicators like a strong manufacturing PMI because investors reacted to company-specific earnings outcomes in IT and ongoing global uncertainties, rather than domestic economic fundamentals. The market drop was thus a sector-led correction rather than a reflection of weakening economy-wide data [1][3].
[1] Source: Livemint.com [2] Source: Business Standard [3] Source: Economic Times [4] Source: Financial Express
- Amid slightly weaker market performance, new-age tech companies like Eternal, Paytm, and Ola Electric displayed growth.
- The IT sector's decline, affecting companies such as Infosys, Tech Mahindra, and CϪForge, weighed heavily on the overall market.
- In the midst of a robust private sector growth indicated by a 17-year high Manufacturing PMI, a sector-specific correction in the IT stocks occurred on July 24, 2025.
- The selling pressure in the traditional IT firms may have been due to concerns about margins, global business conditions, or rotation out of expensive IT valuations.
- While the India–UK Free Trade Agreement promised new export opportunities for high-tech manufacturing and electronics, it did not seem to positively impact stock sentiment during the IT sector rout.
- Despite the IT sector's correction, the PSU Bank index rallied over 1.40 percent, showing resilience in certain sectors.
- In addition to the IT sector's challenges, stock prices of Nestle India and Reliance Industries significantly declined on that day, as did the rupee, with gold prices also dropping around $60.
