The Indian equity market commenced trading for the year 2026 on a subdued and cautious note, reflecting thin liquidity as major global markets observed a holiday for New Year's Day. The benchmark indices presented a mixed picture at the close of the session on Wednesday, January 1.
Benchmark Indices Show Divergent Trends
The S&P BSE Sensex closed 0.07% lower at 85,166 points, failing to hold on to positive territory. In contrast, the broader Nifty 50 managed a marginal gain of 0.12%, settling at 26,159. The performance of broader market indices was also split, with the Nifty Midcap 100 index rising by 0.30%, while the Nifty Smallcap 100 index declined by 0.20%.
Sectoral Performance: A Tale of Two Halves
Sectoral indices displayed significant divergence, painting a clear picture of where the money moved on the first trading day of the year. The Nifty FMCG index was the biggest drag, plummeting 3.2%. This sharp fall was primarily driven by a heavy sell-off in index heavyweight ITC Ltd.
Other sectors that ended in the red included Nifty Chemicals, Nifty Pharma, and Nifty Oil and Gas. On the positive side, the Nifty Auto index surged 1%, leading the gainers. Sectors like Nifty Realty, Nifty Metal, Nifty IT, and Nifty PSU Bank also closed higher, registering gains between 0.70% and 0.92%.
Key Stocks in Focus: Losers Outpace Gainers
Several prominent stocks faced significant selling pressure, emerging as the day's top losers. Godfrey Phillips, ITC, Reliance Infrastructure, Ather Energy, and Kaynes Technology were among the notable names that witnessed substantial declines, contributing to the negative sentiment in their respective sectors.
The month of January is poised to be eventful for market participants. Investors will keenly await business updates from companies and the onset of the December quarter earnings season. Macro factors, including ongoing trade talks with the US and the upcoming US Federal Reserve meeting, will also be closely monitored for directional cues.
Historical trends add a layer of caution, as the Nifty 50 has closed lower in January for each of the last five consecutive years. While domestic liquidity continues to provide a cushion for Indian equities, the behavior of Foreign Portfolio Investors (FPIs) remains a critical watchpoint. According to NSDL data, FPIs withdrew a record ₹1.6 lakh crore from the Indian market in 2025, and their stance in the new year will be crucial for sustained market momentum.
