Indian equity benchmarks concluded the first trading session of 2026 near the flatline, with mixed performance across sectors. The BSE Sensex and NSE Nifty 50 showed resilience despite significant pressure from tobacco stocks following government policy changes on excise duties.

Market Closing Performance

The benchmark indices displayed contrasting movements at the session close:

The Nifty managed to hold above the crucial 26,100 level, with nearly 40 stocks ending higher on the index. Market breadth favoured advances, indicating underlying strength despite the headline index performance.

Sectoral Performance and Key Movers

Banking and midcap stocks provided crucial support to the broader market during the session. The Nifty Bank index gained 130 points to close at 59,712, while the Midcap index rose 266 points to 60,750.

Top Performers:

Auto stocks witnessed significant buying interest, with Bajaj Auto advancing ahead of its monthly sales announcement. Estimates point to 15.00% sales growth for the company.

ITC Leads Decliners on Excise Duty Hike

The FMCG sector faced severe pressure following the government's sharp increase in excise duty on tobacco products. ITC emerged as the top Nifty loser, ending the session down 9.00% after the finance ministry implemented new duty structures.

The government announced excise duty rates of ₹2,050–8,500 per 1,000 sticks, with variations based on cigarette length, effective from February 1.

Broader Market and Sector Highlights

Telecom stocks gained momentum following positive policy developments. Vodafone Idea and Indus Towers rose after the Cabinet approved restructuring of AGR dues, providing relief to the sector.

Among midcap performers, several stocks registered strong gains:

On the downside, Avenue Supermarts slipped 2.00% ahead of its quarterly update, while PB Fintech declined after RBI raised concerns over higher commissions for insurance companies. MCX witnessed profit booking and ended the session down 1.00%.

Historical analysis of Indian equity markets reveals a consistent pattern of volatility during January, with performance varying significantly across different market segments and sectors over the past decade.

Benchmark Index Performance Shows Mixed Results

The Nifty 50's January performance over the past ten years demonstrates the unpredictable nature of market movements during this period. The benchmark index closed positively in only two instances, delivering notable gains exceeding 4.50% in both 2017 and 2018. However, the overall trend remained subdued with an average return of -0.31% for the month.

Broader Market Indices Mirror Volatility Trends

The broader market segments exhibited similar inconsistency patterns. The Nifty Midcap 100 finished higher in four of the last ten Januaries, recording an average return of -0.51%. The index experienced three instances of declines exceeding 5.00% in 2016, 2019, and 2025, balanced by three periods of gains surpassing 5.00% in 2017, 2020, and 2024.

Small-cap stocks faced even greater volatility, with the Nifty Smallcap 100 posting an average return of -1.00%. The index recorded substantial declines of approximately 10.00% in both 2016 and 2025, while achieving gains exceeding 5.00% in 2017, 2020, and 2024.

Sector Analysis Reveals Clear Winners and Laggards

Sectoral performance data over the past decade identifies distinct patterns among different industry segments. The IT sector emerged as the most consistent performer, delivering positive returns in seven out of ten Januaries with an average return of 1.40%.

The automotive and energy sectors also demonstrated relatively better performance, with positive returns in six and five Januaries respectively. Conversely, metals and pharmaceuticals emerged as the biggest underperformers with average returns of -1.90% and -2.10% respectively.

Individual Stock Consistency Patterns

Analysis of individual stock performance reveals remarkable consistency among select companies. Only four stocks with market capitalization above ₹10,000.00 crore achieved six consecutive positive Januaries, led by RVNL with 24.50% average returns, followed by Indian Bank at 8.00%, Hero MotoCorp at 5.80%, and Jyothy Labs at 4.30%.

On the opposite spectrum, five stocks with market capitalization above ₹2,000.00 crore recorded six consecutive negative Januaries:

• Zee Entertainment: -12.40% average return
• GM Breweries: -9.50% average return
• Spandana Sphoorty: -9.00% average return
• Rane Holdings: -6.60% average return
• Stylam: -5.90% average return

The historical data emphasizes that while seasonal patterns exist in Indian equity markets, they do not guarantee directional movement. Volatility remains the defining characteristic of January trading, requiring investors to approach the month with appropriate risk management strategies rather than relying solely on historical trends for investment decisions.