The S&P rating was slightly disappointing as some upgrade had been anticipated following Moody's recent positive rating action, said Anita Gandhi, whole-time director at Arihant Capital Markets.
"In terms of valuations, markets are slightly on the higher side. The driving factor going forward will be the GDP and fiscal deficit data, expected on Thursday," she added.
The Sensex was down 31 points at 33,648 while Nifty was off 16 points at 10,373.
Oil refiners fell as crude prices touched a two-year high earlier in the day, with Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd down more than 1 percent each.
The Nifty PSU bank index fell as much as 1.3 percent in its third straight session of losses, with State Bank of India shedding more than 1 percent.
Infosys Ltd lost more than 1 percent after gaining in the last four sessions as investors booked profits.
Sun Pharmaceutical Industries Ltd slid as much as 2.1 percent after its unit on Friday recalled two batches of Riomet, an oral diabetes drug, due to microbial contamination. (With Agency Inputs)