Indian equity benchmarks extended their decline for the second consecutive session on Tuesday, closing lower on expiry day. The Nifty slipped below its immediate support near the 26,200 mark, with analysts maintaining that the index continues to hold a positive bias despite the recent weakness.

Market Performance Overview

The Nifty opened at 26,189.70 and staged a quick rebound within the first hour, climbing to an intraday high of 26,273.00. However, selling pressure returned in the afternoon, pulling the index down nearly 150 points from the day's high to an intraday low of 26,124.00 around 2:30 p.m.

Technical Analysis and Market Outlook

Rajesh Bhosale of Angel One emphasized that from a technical standpoint, the Nifty continues to hold above the breakout zone and remains above key short-term moving averages, thereby maintaining a positive bias. The index has formed a high wave candle with a lower high and lower low, signaling consolidation with corrective bias around the all-time high.

Analysts advise traders to use the brief consolidation as a buy-on-dips approach, as long as the index sustains above the support area of 26,000-25,900.

Sectoral Performance and Top Movers

The PSU Bank segment stood out as the star performer within the Nifty Bank sector, outperforming private banks. Most sectoral indices rose with Nifty Pharma and Nifty PSU Bank leading the gains, while Nifty Oil & Gas and Nifty Media were among the losers.

Apollo Hospitals emerged as the top Nifty gainer, surging 3.50%, while ICICI Bank and Tata Consumer Products led the charge among frontline stocks. On the downside, Trent witnessed the steepest decline, plummeting 8.46% following its weak quarterly business update.

Market Breadth and Broader Indices

The broader market corrected in tandem with benchmarks, as the Nifty Midcap 150 ended 0.20% lower and the Nifty Smallcap 250 closed 0.31% lower. Market breadth was skewed in favor of sellers, with 1,735 stocks declining, 1,500 advancing, and 195 remaining unchanged on the BSE.

Bajaj Broking Research noted that Bank Nifty formed a small bull candle with shadows in either direction, signaling consolidation amid stock-specific action around the all-time high. Despite the near-term consolidation, the broader positional trend remains bullish as the Nifty continues to trade above key moving averages.

Indian equity markets faced headwinds as benchmark indices ended lower despite selective strength in certain sectors. The session highlighted mixed corporate developments and regulatory actions that shaped investor sentiment across multiple industries.

Market Performance Shows Mixed Signals

Indian equity benchmarks closed Tuesday's session in negative territory, weighed down by losses in major stocks including Reliance Industries, Trent, and select consumption names. However, pockets of strength emerged in financials, metals, and pharmaceuticals sectors. The Nifty managed to defend the crucial 26,150 level during the weekly expiry session, despite pressure from heavyweight stocks such as Reliance Industries and HDFC Bank.

Services Sector Momentum Weakens

India's services sector growth showed signs of deceleration in December, with the HSBC India Services Purchasing Managers' Index slipping to concerning levels. The PMI data revealed a notable slowdown in economic momentum.

The December reading came in below the flash estimate of 59.1, indicating that fresh demand softened and hiring activity stalled. While the PMI remained above the 50-mark that separates expansion from contraction, the decline suggests moderating growth in the services sector.

Corporate Developments and Regulatory Actions

Reliance Industries strongly denied reports suggesting Russian oil cargoes were headed to its Jamnagar refinery, calling such claims "blatantly untrue" and stating they have tarnished the company's image. The company clarified it is not expecting any Russian cargo in January.

Shares of Indian Energy Exchange surged as much as 13% after the lawyer representing the Central Electricity Regulatory Commission indicated readiness to take instructions from the Electricity Appellate Tribunal to withdraw the July 23, 2025 order. This development provided significant relief to investors, as the original order had caused IEX shares to fall nearly 30% in a single trading session.

RBI Strengthens Financial Institution Oversight

The Reserve Bank of India issued Amendment Directions on Lending to Related Parties, targeting enhanced governance and transparency across the financial sector. The new regulations apply to multiple institution types and include provisions for non-compliant transactions under specific conditions.

These directions aim to tighten governance around transactions involving related parties, strengthening the overall regulatory framework for financial institutions.

Steel Sector Under Regulatory Scrutiny

The Competition Commission of India sought responses from steel companies following its investigation arm's findings of prima facie cartelisation concerns. Sources indicated that the probe, headed by CCI's director general, concluded that around 35 steel companies have prima facie indulged in cartelisation. However, the Competition Commission has not accepted or rejected these findings at this stage, with no ruling passed yet on the allegations.