Benchmark indices retreated for the second consecutive session on Monday, with the Nifty closing below the psychologically important 25,000 mark, dragged down by IT stocks and negative global sentiment following Moody’s downgrade of US sovereign credit rating.

The BSE Sensex fell 271.17 points or 0.33 per cent to end at 82,059.42, while the broader NSE Nifty dipped 74.35 points or 0.3 per cent to close at 24,945.45. The decline came despite positive market breadth, with 2,531 stocks advancing against 1,565 declining on the BSE.

“Indian stocks witnessed a volatile session, with the Nifty and Bank Nifty decoupling from each other. The Nifty slipped lower as IT and Oil & Gas stocks came under profit-taking pressure,” said Rupak De, Senior Technical Analyst at LKP Securities.

The IT sector emerged as the biggest laggard, declining over 1.3 per cent after Moody’s downgraded the US sovereign credit rating from Aaa to Aa1, citing concerns about the nation’s surging $36 trillion debt. Infosys was among the top losers, dropping 2.01 per cent to close at ₹1,557.90.

Auto stocks bucked the trend, with Bajaj Auto leading the gainers, surging 4.10 per cent to ₹8,830, followed by Hero MotoCorp, which rose 0.89 per cent to ₹4,384.

In the financial space, Shriram Finance gained 1.85 per cent to ₹677.80, while Bajaj Finance added 0.88 per cent to close at ₹9,248. Among utilities, Power Grid Corporation advanced 1.35 per cent to ₹304.25.

On the losing side, Eternal led the decliners with a 3.06 per cent drop to ₹238.25, followed by Grasim Industries which fell 2.90 per cent to ₹2,723. Tata Consumer Products and Dr. Reddy’s Laboratories also faced selling pressure, declining 1.54 per cent and 1.23 per cent respectively.

“The index appears to be in a consolidation phase, which may continue for the next few days,” added De. “The Nifty could remain under pressure unless it reclaims the 25,000 level. On the downside, it could drift toward the 24,800–24,750 zone.”

The broader markets showed resilience, with the Nifty Midcap 100 gaining 0.08 per cent to 57,105.45 and the Nifty Next 50 advancing 0.49 per cent to 67,405.80. Sectoral performance was mixed, with realty and pharma indices moving higher while IT declined significantly.

“The broader market also witnessed a mixed performance, as the small-cap index gained over half a percent, while the mid-cap index ended flat,” noted Ajit Mishra, SVP, Research, Religare Broking Ltd. “We believe this intermediate pause in the index, without any significant damage to the overall structure, is a healthy sign.”

Among sectoral gainers, Nifty Realty outperformed with a 2.2 per cent gain, followed by PSU Bank and Pharma indices which advanced 1.5 per cent and 0.5 per cent respectively, according to market data.

The Indian rupee showed strength, appreciating by 10 paise against the US dollar to settle at 85.40, supported by cooling crude oil prices and a softening greenback.

Market volatility increased, with the India VIX rising 4.98 per cent to 17.38, reflecting investor caution amid global uncertainties.

“Technically, Nifty formed a small red candle on the daily scale. However, the index is still holding above the breakout zone of 24,800–24,850, which indicates underlying strength,” said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Intermediates.

Looking ahead, analysts remain cautiously optimistic. “Despite the profit booking, sustained FII inflows, underpinned by favorable macroeconomic conditions, are expected to uphold overall market optimism,” said Vinod Nair, Head of Research, Geojit Investments Limited.

Experts suggest that banking stocks could lead the next phase of the rally. “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,” Mishra added.

The market outlook remains constructive for the coming sessions, with technical analysts expecting Nifty to hold above immediate support at 24,800 and potentially target the range of 25,200-25,300 . Investors are advised to monitor upcoming corporate earnings, global cues, and foreign fund flows as key factors influencing market direction in the near term.

Published on May 19, 2025