On the 30-share Sensex, declines were led by ITC, Bajaj Finance, Asian Paints, Bharat Electronics and ICICI Bank, with losses ranging from around 0.4% to almost 10%.Broader market movements were mixed. Small-cap stocks fell 0.1%, while mid-caps outperformed, rising 0.4%.
Cigarette makers’ shares were hit particularly hard after the government announced an increase in cigarette duties from February. ITC fell 9.7%, while Godfrey Phillips fell 17.1%. Analysts at Jefferies described the tax increase as a “clear negative” for market leader ITC, warning it could depress cigarette volumes and reignite concerns about market share loss from the illicit trade.
The sell-off in the ITC caused the fast-moving consumer goods index to fall 3.2%.
Indian stocks posted solid gains in 2025, with Sensex and Nifty rising 9.1% and 10.5% respectively, although both underperformed their peers from emerging markets and Asia.
Expert views
Indian equity markets started the first trading session of the year on a steady and constructive footing, with global cues largely muted as most international markets were closed for the festive season, allowing domestic factors to take center stage, said Ponmudi R, CEO of Enrich Money. He added that the auto sector emerged as the biggest gainer, supported by strong investor optimism following the release of impressive monthly sales figures, reinforcing confidence in continued demand momentum.
“Resilient domestic demand, reform-led growth framework, policy continuity and continued government-led capital expenditure continue to provide comfort to investors and attract new purchases at lower levels, providing strong downside support to equities. Overall, the tone at the start of the year remains constructive, with investor preference clearly towards quality companies backed by sustainable earnings and strong balance sheets,” Ponmudi said.
In technical terms, the 26200-26240 zone for Nifty will act as a major hurdle for the index, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, adding that “any sustained move above the 26240 level will lead to a sharp upward rally in the index to the 26400 level in the near term. 26030-26000 will act as immediate support for the index.”
Global markets
Most global markets were closed for the New Year holidays.
Rough impact
Oil prices fell on Wednesday, capping a tough year for energy markets, as rising supply concerns overshadowed demand. Crude oil prices posted annual losses of nearly 20% in a year marked by wars, higher tariffs, increased OPEC+ production and sanctions on major producers including Russia, Iran and Venezuela.
Brent crude futures fell about 19% in 2025, the steepest annual percentage decline since 2020, marking a third straight year of losses, the longest stretch on record. US West Texas Intermediate crude fared similarly, down nearly 20% annually.
Rupee vs dollar
The Indian rupee weakened on Thursday, falling 10 paise to a provisional close of 89.98 against the US dollar in the first trading session of 2026, pressured by continued foreign fund outflows and a softer tone in domestic equities.
The dollar index, which measures the greenback against a basket of six major currencies, rose 0.09% to 98.32, adding to pressure on emerging market currencies.
(with input from agencies)
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