India’s equity benchmarks ended largely unchanged in the first trading session of 2026, as gains in auto stocks offset a decline in shares of cigarette-makers after the government announced a new tax. The Nifty 50 index rose 0.06% to 26,146.55 on Thursday, while the BSE Sensex index lost 0.04% to 85,188.6. The indexes rose 10.5% and 9.1%, respectively, in 2025 but lagged emerging and Asian market peers. Twelve of the 16 major sectors rose on the day. The auto index advanced 1% as sales to dealers rose from a year earlier in December aided by tax cuts. Shares of India’s Mahindra & Mahindra gained 1.4%. Bus and truck maker Ashok Leyland jumped 3.2% to a record high. On the other hand, cigarette makers ITC and Godfrey Phillips tanked 9.7% and 17.1%, respectively, after the government imposed excise duty on cigarettes from February. Read more: Earnings, policy support set to lift Indian equities after 2025 underperformance Jefferies analysts called the move “a clear negative” for market leader ITC, saying it would hurt cigarette sales volumes and revive concerns about losing share to the illicit industry. ITC dragged the fast-moving consumer goods index 3.2% lower. Overall trading remained muted due to the New Year holiday across the globe. Going ahead, investor sentiment is likely to hinge on corporate earnings and a strength in economic growth, said Vinod Nair, head of research at Geojit Investments. A favourable India-U.S. trade agreement and supportive policies in the union budget would be crucial for markets in 2026, analysts said. Among other stocks, Piccadily Agro climbed 6.8% after the sugar company started commercial production at its Chhattisgarh unit. India’s broader small-caps fell 0.1% while mid-caps gained 0.4%.