Indian Indices Muted; IT Sector Falls After Moody's Cuts U.S. Credit Rating

On the broader front, small-cap stocks rose 0.86 per cent and mid-cap shares gained 0.37 per cent, reflecting domestic investor interest.

Market Update at 12:30 PM: India's key equity indices remained mostly flat in early trade on Monday, with IT stocks dragging the market lower after Moody’s downgraded the U.S. sovereign credit rating.

As of 12:15 p.m. IST, the Nifty 50 edged down slightly by 0.17 per cent to 25,975, while the BSE Sensex dipped 0.16 per cent to 82,200. While 11 out of the 17 major sectoral indices posted gains, the nearly 1% fall in the IT sector index limited overall progress.

On the broader front, Small-Cap stocks rose 0.86 per cent and Mid-Cap shares gained 0.37 per cent, reflecting domestic investor interest.

Moody’s cut the U.S. credit rating to AA1 from AAA, citing elevated debt levels and interest costs that outpace those of similarly rated nations. This weighed heavily on Indian IT stocks, which had rebounded last week on optimism about the U.S. economy avoiding a recession.

The IT index had surged 5.8% last week, registering its second-best weekly performance in 2025. However, the downgrade has now led to higher U.S. Treasury yields, making emerging market equities like India less appealing to foreign investors.

In individual stock action, Divi’s Laboratories surged over 5 per cent following a rise in its Q4 earnings, making it the top gainer among Large-Cap stocks. On the other hand, CreditAccess Grameen dropped around 5 per cent after reporting a fall in quarterly profit due to lower net interest income.

Market Update at 10:20 AM: India’s key equity indexes started Monday almost flat, with declines in information technology stocks balancing out gains in most other sectors.

The Nifty 50 slipped marginally by 0.01 per cent to 25,020, while the BSE Sensex edged down 0.05 per cent to 82,289.12 by 9:18 a.m. IST.

On Friday, U.S. Treasury yields climbed after Moody’s downgraded the U.S. government’s credit rating from AAA to AA1, pointing to rising debt levels and higher interest costs compared to other similarly rated countries.

IT sector stocks, which derive a large portion of revenue from the U.S., fell 1 per cent.

However, eleven of the other twelve sector indexes ended higher.

The broader small-cap and mid-cap indices, which are more focused on the domestic economy, rose 0.8 per cent and 0.4 per cent, respectively.

Pre-Market Update at 8:00 AM: Early signs from the Gift Nifty suggest a muted start for Indian equity markets on Monday, May 19, 2025. Around 07:18 am, the index hovered near 25,059, indicating a 30-point dip from its previous close.

Asian shares were in the red in early trade, even as Wall Street ended the past week on a positive note, aided by a temporary easing of trade tensions between the U.S. and China.

This week, market participants will keep a close watch on quarterly corporate earnings, economic indicators, global trade developments, and any geopolitical headlines, especially concerning India-Pakistan relations.

Stock-specific moves are expected to continue on Dalal Street, especially with several big companies set to report their Q4 numbers today. Among the key names scheduled to announce earnings are Power Grid Corporation, Bharat Electronics, DLF, PI Industries, Petronet LNG, NLC India, Gujarat Gas, and IRB Infrastructure Developers.

Foreign Institutional Investors (FIIs) were net buyers with inflows worth Rs 8,831.05 crore, whereas Domestic Institutional Investors (DIIs) booked profits, selling stocks worth Rs 5,187.09 crore.

Benchmark indices ended Friday marginally lower as investors locked in recent gains. The Sensex slipped 200.15 points (0.24 per cent) to close at 82,330.59, while the Nifty50 declined 42.30 points (0.17 per cent) to settle at 25,019.80.

Asian indices opened weak on Monday, weighed down by caution ahead of key economic updates. Meanwhile, U.S. markets ended the week strongly. The Dow climbed 331.99 points (0.78 per cent) to 42,654.74. The S&P 500 rose 41.45 points (0.70 per cent) to 5,958.38, and the Nasdaq gained 98.78 points (0.52 per cent) to finish at 19,211.10. For the week, the Nasdaq rallied 7.2 per cent, S&P 500 rose 5.3 per cent, and the Dow added 3.4 per cent.

Moody’s has lowered the U.S. sovereign credit rating from “Aaa” to “Aa1,” citing the ballooning national debt of USD 36 trillion. However, it upgraded the economic outlook from “negative” to “stable.”

The U.S. dollar index weakened, ending its four-week rally. It lost 0.3 per cent against the yen (145.22), 0.2 per cent versus the Swiss franc, while the euro climbed to USD 1.1185 and the pound edged higher to USD 1.3299.

Gold prices surged 1.4 per cent to USD 3,247.40 per ounce, boosted by a softer dollar and safe-haven demand amid fresh comments on tariffs from the U.S. Treasury Secretary.

Oil prices were relatively flat. Brent crude settled at USD 65.43 per barrel and U.S. crude edged up to USD 62.52, as traders awaited clarity on the U.S.-Iran nuclear talks and key data from China.

For today, Titagarh Rail Systems, Hindustan Copper and Mannapuram Finance continue to remain under the F&O ban list.

Disclaimer: The article is for informational purposes only and not investment advice.