D-Street welcomes 2026 on a sober note amid thin volumes

Mumbai: Indian equities started 2026 on a muted note on Thursday, with benchmark indices closing flat amid thin trading volumes.

The NSE Nifty ended at 26,146.55, up 16.95 points or 0.1%, while the BSE Sensex settled at 85,188.60, down 32 points, or 0.04%. Both indices had closed about half a per cent lower in December. Trading activity was subdued globally, as most overseas markets remained closed for the New Year.

"Given the thin volumes and lack of cues from global markets, the tone of the market remained flattish. However, there was a lot of stock-specific action," said Sunny Agrawal, head of Fundamental Research at SBI Securities. He said breadth has been weak, with most stocks undergoing price corrections, and expects stock-specific moves to continue as third-quarter results begin next week.

Sectorally, the Nifty Auto index gained 1% after companies reported December sales figures. Nifty IT, Realty and Metal rose 0.8% each. The Nifty FMCG index fell by over 3%, dragged down by ITC shares after the finance ministry set February 1 as the effective date for the additional excise duty on tobacco products. ITC tumbled 9.7%, while Godfrey Phillips India plunged 17%.

"The index has been consolidating for two months. Typically, the first trading day of the year sees low activity, but the broader market outperformed today led by stock-specific buying," said Ruchit Jain, head of Technical Research at Motilal Oswal Financial Services.

The Nifty Mid-cap 150 advanced 0.4%, while the Small-cap 250 slipped 0.1%. In the past week, the mid-cap index closed 0.6% higher and the small-cap index rose 0.1%. Market breadth remained narrow, with more decliners than gainers on BSE.

Foreign portfolio investors on Thursday were net sellers worth ₹3,268.6 crore, while domestic institutions bought ₹1,525.9 crore worth of shares. In December, FPIs had sold ₹30,391 crore worth of equities.

Analysts said the market has already undergone both price-wise and time-wise corrections.

Agrawal expects narrow participation, with banking, NBFCs and auto stocks near one-year highs likely to lead, while beaten-down sectors such as IT, pharma and power could see recovery.