Jan 1 (Reuters) - India's equity benchmarks were muted on Thursday in the first trading session of 2026, as gains in heavyweights Reliance Industries and Mahindra & Mahindra countered a decline in ITC following the announcement of a new tax on cigarettes.
The Nifty 50 index rose 0.03% to 26,136.8, while the BSE Sensex index gained 0.02% to 85,239.28, as of 10:20 a.m. IST. Eight of the 16 major sectors rose.
Reliance Industries, the second heaviest stock on the benchmarks, added 1%, starting the New Year on a positive note. Shares of the conglomerate jumped 29% in 2025, its best year in five, on strength in retail and telecom segments and steady profitability in the oil-to-chemicals segment.
The auto index rose 0.4% as monthly sales data for December trickled in.
Mahindra & Mahindra gained 1% after posting a rise in December auto sales. Tractor maker Escorts Kubota and bus maker SML Mahindra climbed 1.6% and 4.7%, respectively, on robust sales.
On the other hand, cigarette makers ITC and Godfrey Phillips fell 5.8% and 10%, respectively, after the government imposed excise duty on cigarettes from February.
ITC dragged the fast-moving consumer goods index 2.2% lower.
"Benchmarks are expected to remain sideways with selective buying amid thin trading volumes due to New Year holidays across global markets," said Siddhartha Khemka, head of research of wealth management at Motilal Oswal Financial Services.
Quarterly earnings, India-U.S. trade negotiations and the union budget will decide the near-term market trajectory, Khemka said.
India's broader small-caps and mid-caps lost 0.5% and 0.2%, respectively.
Among other stocks, Piccadily Agro climbed 12% after the sugar company started commercial production at its Chhattisgarh unit.
Blue Dart advanced 5.3% after the goods and services tax authority dropped a 4.21 billion rupees tax demand.
(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Subhranshu Sahu and Mrigank Dhaniwala)
By Bharath Rajeswaran and Vivek Kumar M
