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Indian equity benchmarks commenced the 2026 calendar year on a muted note, with Nifty 50 settling at 26,146.55, marginally higher, while BSE Sensex edged 32 points lower to close at 85,188.60.

The session saw thin liquidity due to the global New Year holidays and a sharp divergence in sectoral performance. Nifty Auto led the gainers, rising more than 1% on the back of robust December sales figures, complemented by steady buying in the IT and Realty sectors.

However, these gains were largely neutralized by a sharp sell-off in the FMCG pack, which declined more than 3%. This decline was primarily triggered by ITC, which plunged nearly 10%, following a government notification that increased excise duty on tobacco products.

The broader market exhibited relative resilience as the advance-decline ratio remained positive, reflecting underlying strength in mid-cap and small-cap segments.

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Buy: Fedbank Financial Services Ltd(current price: ₹154.5)

Buy: Adani Energy Solutions Ltd (current price: ₹1047)

Nifty 50 Recap

Indian equities ended the first trading session of 2026 on a subdued note, with benchmark indices consolidating after recent gains.

Nifty 50 closed marginally higher at 26,146.55, up 0.07%, after oscillating within a narrow intraday range, while Sensex also finished largely flat, reflecting a lack of strong directional cues.

Market breadth was mildly positive, with 1,683 stocks advancing against 1,448 declines, indicating selective buying interest beneath the surface. On the sectoral front, Auto, IT, Metals, and Realty stocks outperformed, supported by bargain hunting and expectations of steady demand.. On the other hand, FMCG emerged as the key laggard, witnessing profit booking after its recent rally. Financials were mixed, with private banks and financial services inching higher, helping cushion the benchmarks. On the downside, defensive pockets such as FMCG and select pharma names weighed on sentiment.

From a technical standpoint, Nifty 50 continues to display a constructive price structure, ending the session at 26,146 after holding above key short- and medium-term moving averages. Momentum indicators are neutral-to-positive. The RSI (14) is placed near the mid-50s, indicating a healthy balance between buyers and sellers without entering overbought territory.

The recent RSI behavior suggests consolidation rather than exhaustion, which consists of a pause within an ongoing trend rather than a reversal. Meanwhile, the MACD remains above the zero line, although the histogram has flattened, indicating moderating momentum. The narrowing gap between the MACD and signal line highlights a phase of consolidation, but the absence of a sharp bearish crossover suggests downside momentum remains limited.

According to O'Neil’s methodology of market direction, the market status has shifted to a "Confirmed Uptrend" as it decisively surpassed its previous rally high of 25,670 to register a new 52-week high. Looking ahead, we will maintain the Confirmed Uptrend stance as long as market action remains constructive. However, if the distribution day count rises or Nifty breaches key support levels, we may shift the outlook back to an Uptrend Under Pressure to reflect elevated risk.

The index concluded the session higher and continued to trade within 25,700-26,300. From here, a decisive close above 26,300 would meaningfully improve the technical setup and is likely to open the door for a continuation of the ongoing rally toward 26,500–26,700 in the near term. On the downside, 25,700 serves as the first level to monitor for any corrective move, while the 25,300 region represents a critical demand area.

Nifty Bank Performance

Nifty Bank opened the session on a positive note and largely maintained its upward bias throughout the day. Although the index briefly slipped into negative territory, buying interest emerged at lower levels, enabling it to recover swiftly and close in the positive.

On the daily chart, the index formed its third consecutive bullish candle and continues to trade comfortably above all its key moving averages, indicating underlying strength. The session began at 59,674.80 and progressed steadily to an intraday high of 59,743.20, while downside remained limited with a low of 59,569.65.

The index closed near the day’s high at 59,711.55, registering a gain of 0.22%. Overall, the price action reflects strengthening momentum and an improving near-term outlook for banking stocks.

The momentum indicator, RSI, is trending gradually higher and is currently positioned around 62, reflecting improving momentum. Meanwhile, the MACD is approaching a bullish crossover and remains above the zero line, indicating that the broader underlying trend remains intact. Despite these mixed technical signals, Nifty Bank continues to be classified under a Confirmed Uptrend as per O’Neil’s market direction framework, suggesting that the prevailing trend remains constructive.

The index has demonstrated notable resilience over the past three trading sessions, rebounding decisively from its 50-DMA and subsequently reclaiming the 21-DMA, indicating improving near-term strength. On the upside, 59,800–60,100 emerges as a key resistance band, and a sustained breakout above this range would be required to re-establish a stronger bullish bias.

On the downside, 58,500–58,000 continues to serve as a robust support area, supported by selective buying in frontline banking stocks, which has so far limited deeper corrective pressure.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.

Trade name: William O’Neil India Pvt. Ltd.

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Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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