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Markets opened flat on Monday as Moody’s downgrade of the US credit rating dampened global market sentiment, offsetting last week’s strong rally. The Sensex opened at 82,354.92 but slipped to 82,263.97, down 66.62 points or 0.08 per cent at 9.45 AM. Similarly, the Nifty opened at 25,005.35 and traded at 24,997.15, down 22.65 points or 0.09 per cent.
Auto stocks emerged as top gainers in early trade, with Bajaj Auto leading the pack, up 2.48 per cent at ₹8,693. Hero MotoCorp and Eicher Motors followed, gaining 2.36 per cent and 1.83 per cent respectively. Among other sectors, defence continued its upward trajectory with BEL rising 1.29 per cent. FMCG heavyweight Hindustan Unilever advanced 0.76 per cent.
IT stocks faced selling pressure, with Infosys declining 1.42 per cent, followed by HCL Tech (-1.02 per cent), TCS (-0.92 per cent), and Tech Mahindra (-0.85 per cent). Eternal also dropped 1.24 per cent in morning trade.
“Moody’s Investors Service cut the US’ credit rating, citing concerns over rising debt and political deadlock. This is a jolt to US markets, though it may not impact it immediately,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.
The rating downgrade comes just days after a temporary US-China tariff truce had boosted global market sentiment. Last week, Indian equities staged a strong comeback with the Nifty rallying over 4 per cent, while broader indices outperformed significantly. The Nifty Midcap100, Smallcap100, and Microcap250 indices soared 7.21 per cent, 9.17 per cent, and 9.99 per cent respectively.
Foreign Institutional Investors (FIIs) have been aggressively buying Indian equities, injecting ₹8,831 crore on May 16 alone, with month-to-date inflows reaching approximately ₹23,800 crore. Domestic Institutional Investors (DIIs) also purchased equities worth ₹5,187 crore on the same day.
“The prime mover of the ongoing rally in the Indian market is the sustained FII inflows. Of course, the decline in global trade tensions, the rally in global markets led by the US, and the India-Pak ceasefire have created the setting for this rally,” noted Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
However, analysts have flagged potential volatility ahead. “An apparently perplexing trend from the last trading day is that the market declined despite ₹14,018 crores of institutional buying. This indicates that FIIs are increasing their short positions in the derivatives market,” cautioned Dr Vijayakumar.
In the bullion market, gold prices rebounded above $3,220 per ounce after last week’s steep decline. “The recovery was fueled by renewed safe-haven demand after Moody’s downgraded the US sovereign credit rating,” explained Rahul Kalantri, VP Commodities at Mehta Equities.
Aksha Kamboj, Vice President at India Bullion and Jewellers Association added, “Moody’s decision to lower the US credit profile could dampen sentiments around risky assets, which could provide a fillip to safe-haven assets like gold again.”
Technical analysts suggest the Nifty could find support at 25,000, followed by 24,800 and 24,700 levels. “On the higher side, 25,100 can be an immediate resistance, followed by 25,200 and 25,250,” said Hardik Matalia, Derivative Analyst at Choice Broking.
For Bank Nifty, which has shown resilience, “the higher bottom support is placed near 54,400. As long as it is trading above this level, the positive momentum is likely to continue,” according to Shrikant Chouhan, Head of Equity Research at Kotak Securities.
Investors are now focusing on upcoming Q4 results from BEL, DLF, NLC India, Pfizer, PI Industry, PowerGrid, and ZydusWell, with particular interest in defense and railway stocks that surged in Friday’s trade.
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Published on May 19, 2025
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