Market Wrap: IT stocks drag D-Street lower; Sensex sheds 271 pts, Nifty below 25,000

Indian benchmark indices Sensex and Nifty closed lower in a subdued session on Monday, dragged down by losses in information technology stocks after Moody’s downgraded the U.S. government’s credit rating.

The BSE Sensex shed 271.17, or 0.33%, to close at 82,059.42, while the NSE Nifty declined 74.35 points, or 0.30%, to settle at 24,945.45.

The market capitalization of all listed companies on the BSE decreased by Rs 3,452 crore to Rs 443.62 lakh crore.

Sector Watch

Among the 30-stock Sensex pack, shares of Infosys, TCS, Tech Mahindra, HCL Technologies, Reliance Industries, and Eternal were among the top losers, falling between 0.7% and 3%.

Global equities slipped and U.S. Treasury yields rose after Moody's downgraded the U.S. government's credit rating to "AA1" from "AAA," raising concerns over debt levels and widening deficits.

Domestically, IT stocks—heavily reliant on U.S. revenue—were the biggest drag on benchmarks. The Nifty IT index fell 1.3% following the downgrade, which cited elevated debt and interest costs "significantly higher than similarly rated sovereigns."

Defence stocks also declined as investors booked profits after last week’s sharp gains. Shares of Cochin Shipyard, Mazagon Dock Shipbuilders, and Hindustan Aeronautics Ltd (HAL) dropped as much as 4%, pausing a strong rally driven by optimism over new orders and the success of Operation Sindoor.

In contrast, broader markets outperformed. The Nifty Smallcap 100 rose 0.5%, while the Nifty Midcap 100 edged up 0.1%. Both indices have risen for six straight sessions, with mid-caps nearly erasing year-to-date losses. The Nifty and Sensex are up 5.5% and 5%, respectively, in 2025 so far.

Among individual stocks, Vodafone Idea fell 8.7% after moving the Supreme Court to challenge the government’s rejection of its plea to waive over $5 billion in interest and penalties on statutory dues.

Meanwhile, Divi's Laboratories jumped 4.8% after reporting a stronger-than-expected fourth-quarter profit.

Expert View

Markets made a muted start to the week and ended marginally lower, taking a breather after the recent surge, said Ajit Mishra, SVP, Research at Religare Broking, adding that "after a flat opening, the Nifty oscillated within a narrow range throughout the session and settled near the day’s low at 24,945.45."

"We believe this intermediate pause in the index, without any significant damage to the overall structure, is a healthy sign. During such phases, traders should adopt a stock-specific approach. Among the key sectors, banking now merits more attention following its recent consolidation phase, as it could lead the next leg of the rally and help the Nifty move towards the 25,200 mark and beyond," said Mishra.

Technically, the Nifty appears to be in a consolidation phase, which may continue for the next few days, said Rupak De, Senior Technical Analyst at LKP Securities, adding that the index may remain under pressure unless it reclaims the 25,000 level.

"On the downside, the Nifty could drift toward the 24,800–24,750 zone. A deeper correction may be likely if it breaks below 24,750. Conversely, a move above 25,000 could trigger a rally toward the 25,250–25,350 range," said De.

Global Markets

Asian markets declined, weighed down by weak Chinese economic data and rising U.S. trade tensions. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8%, while Japan’s Nikkei dropped 0.7%. Chinese blue chips edged down 0.4% after April retail sales missed forecasts, though industrial output declined less than expected.

Wall Street futures slipped alongside the dollar on Monday, while U.S. Treasury yields climbed, as Moody’s downgrade of the U.S. credit rating reignited concerns over erratic economic policy.

S&P 500 and Nasdaq futures fell 1% and 1.3%, respectively, following last week’s rally after President Donald Trump announced lower tariffs on Chinese goods. U.S. 10-year Treasury yields rose 7 basis points to 4.51%, extending Friday’s jump on the Moody’s news. The 30-year yield briefly touched 5.0%.

In Europe, EUROSTOXX 50 futures were flat, while FTSE futures dipped 0.3% and DAX futures lost 0.2%.

Rate cut expectations continued to ease. Markets now price in 52 basis points of Federal Reserve cuts this year—down from over 100 basis points a month ago—with futures showing a 33% chance of a move by July, rising to 72% by September, according to Reuters.

In commodities, gold rebounded, rising 0.6% to $3,222 an ounce after shedding nearly 4% last week.

Crude Impact

Oil prices edged lower on Monday, pressured by Moody’s downgrade of the U.S. sovereign credit rating and weaker-than-expected economic data from China, including a slowdown in industrial output and retail sales.

Brent crude futures fell 46 cents, or 0.7%, to $64.95 a barrel by 0943 GMT, while U.S. West Texas Intermediate (WTI) slipped 26 cents, or 0.4%, to $62.23.

Rupee vs Dollar

The Indian rupee ended 0.1% higher on Monday, settling at 85.40 against the dollar, supported by a weaker U.S. dollar amid renewed concerns over U.S. debt and deficits following Moody’s downgrade of the country’s sovereign credit rating.

Meanwhile, the dollar index, which measures the greenback against a basket of six peers, was down 0.86% at 100.22.

(With inputs from agencies)