The Indian equity benchmarks kicked off the first trading session of the year 2026 on a subdued note, closing virtually unchanged after a volatile day. The session, which marked the beginning of the new financial calendar, saw the benchmark indices struggle for direction amidst mixed global cues and sector-specific pressures.
Benchmarks Struggle at Record Highs
The 30-share Sensex pack concluded the day at 80,049.67 points, registering a marginal gain of just 10.47 points or 0.01%. Similarly, the broader Nifty 50 index settled at 24,315.70, up by a mere 5.70 points or 0.02%. This flat closing came after both indices had scaled fresh lifetime highs in the previous week, suggesting a phase of consolidation at elevated levels.
Market breadth, however, told a slightly more positive story. The BSE Midcap index outperformed, rising by 0.46%, while the Smallcap index gained 0.27%. This indicated that buying interest was more pronounced in the broader market compared to the heavyweight index constituents.
ITC Emerges as the Biggest Drag
The most significant pressure on the frontline indices came from FMCG and cigarette major ITC. The stock was the top loser on both the Sensex and Nifty, witnessing a sharp decline. Analysts attributed this sell-off to continued concerns over potential new regulations in the tobacco sector, which have been a persistent overhang on the stock. The weakness in ITC single-handedly pulled the indices lower, offsetting gains in other sectors.
Other notable laggards among the Sensex components included Mahindra & Mahindra (M&M), Hindustan Unilever (HUL), and Larsen & Toubro (L&T). On the flip side, Reliance Industries (RIL), Tata Consultancy Services (TCS), and Axis Bank provided some support to the index, helping it stay in positive territory.
Sectoral Performance and Market Sentiment
Sectoral indices displayed a mixed trend. The Nifty Realty index surged by 1.64%, emerging as the top performer, followed by gains in Media and PSU Bank indices. On the other hand, the Nifty FMCG index dropped by 0.70%, largely weighed down by ITC's fall. The Auto and Pharma indices also ended in the red.
Market experts viewed the flat close as a sign of profit-booking after a strong rally and a cautious stance adopted by investors at the start of the new year. Traders are likely awaiting fresh triggers, including corporate earnings for the December quarter and key macroeconomic data, for further direction. The overall sentiment remains cautiously optimistic, supported by strong domestic inflows, but global factors and valuation concerns are keeping rallies in check.
The first trading day of 2026 has set a tentative tone for the Indian markets. While the resilience of the broader market is a positive sign, the significant drag from a large-cap like ITC highlights how sector-specific risks can impact indices. Investors are expected to remain selective, focusing on companies with strong fundamentals and clear growth visibility in the coming sessions.
