Opening Bell: Sensex, Nifty set for flat start; Asian stocks fall after U.S. credit rating downgrade

Indian share market is set to start the week on a muted note, mirroring weakness in Asian peers and U.S. stocks futures after Moody’s Ratings downgraded the U.S.’ credit rating, citing a widening of the government’s budget deficit. The weak trends at GIFT Nifty futures also indicate a gap-down start for the domestic benchmark indices BSE Sensex and NSE Nifty. At 8:35 AM, GIFT Nifty futures were trading 23.5 points, or 0.9 lower at 25,067 level.

The Dalal Street will continue to see stock specific reactions as many big players such as Power Grid Corporation , Bharat Electronics , DLF, DOMS Industries, Gujarat Gas , HEG, One Mobikwik Systems, Petronet LNG , Pfizer , Quess Corp , Sun Pharma Advanced Research Company, and Zydus Wellness are set to release their March quarter results today.

Last week, the BSE benchmark Sensex soared nearly 3,000 points and the NSE Nifty 50 surged over 1,000 points as sentiment was boosted by easing concerns about global trade war and border tensions with Pakistan. On Friday, the Sensex ended down by 200.15 points, or 0.24%, at 82,330.59, and the Nifty50 settled lower by 42.30 points, or 0.17%, at 25,019.80, as investors booked profit at higher levels.

Asian stocks slide on U.S. rating downgrade, mixed macro data

In the Asia-Pacific region, equity market started the week on a bearish note, with all major indices declining as sentiments were dented by U.S. rating downgrade and China’s mixed macro data. The American rating agency Moody’s has lowered the U.S. credit rating, citing an increase in government debt and a higher interest burden.

China’s Shanghai Composite fell 0.2% in opening trade as traders reacted to mixed macro data which flagged concerns about health of the Asia’s biggest economy. The data showed that China’s industrial production grew higher than expected in April, but retail sales and fixed asset investment missed growth estimates.

Meanwhile, the Nikkei 225 index in Japan was down 0.35%, South Korea’s Kospi slide 0.7%, and Hong Kong’s Hang Seng slipped nearly 0.5%. Among others, Singapore’s Straits Times, and Taiwan Weighted index slide 0.2% and 0.7%, respectively, while Indonesia’s Jakarta Composite added 0.4%. Meanwhile, Australia’s ASX 200 ended 0.15% lower.

U.S. stocks futures slide

The U.S. stocks futures also saw sharp sell-off after Moody’s downgraded the U.S.′ credit rating. As per the latest exchange data, Futures tied to the Dow Jones Industrial Average tumbled nearly 300 points, or 0.7%. Similarly, the S&P 500 futures and the Nasdaq 100 futures were down up to 0.8% during Asian trading hours.

On Friday, Moody’s slashed the country’s rating down by one notch to Aa1 from Aaa, citing the federal government’s ballooning budget deficit and high borrowing costs. This is going to have double whammy impact on the world’s largest economy as downgrade could impact bond prices and raise yields at a time when the nation is dealing with inflationary impact of President Donald Trump’s aggressive tariff policy.

Technical outlook

With no major global or domestic events scheduled this week, market focus is expected to shift towards domestic earnings and high-frequency economic data for directional cues. Updates on global trade deals and their impact on overseas markets will also be closely tracked, said Ajit Mishra – SVP, Research, Religare Broking Ltd. The market participants will continue to monitor foreign capital flows, which have played a significant role in sustaining the current rally, he said.

“Having broken out of a three-week consolidation, the Nifty is expected to sustain its upward momentum. The index is now targeting levels of 25,200–25,600. On the downside, the earlier resistance at 24,800 is likely to act as immediate support, with a stronger support base at 24,400,” he said.

Mishra has maintained a bullish outlook on the market and advise investors to adopt a “buy on dips” approach. With all major sectors participating in the rally on a rotational basis, stock selection based on a favourable risk-reward profile remains critical.

In particular, thematic plays like defense, railways which have shown exceptional performance in recent weeks, may continue to offer opportunities. However, traders should maintain a disciplined approach, including clear exit strategies while pursuing momentum trades, and avoid taking contrarian positions without strong supporting signals, he added.