Sensex settles 250 pts lower from day's high, Nifty ends below 26,150: 5 key reasons behind market decline

Stock market today News: Sensex, Nifty see profit booking in trade. 

• Sensex and Nifty slipped after early gains in first trading session of 2026
• Profit booking, FII selling, and thin volumes weighed on market sentiment
• Tobacco stocks fell sharply after new excise duty on cigarettes

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The benchmark equity indices Sensex and Nifty gave up early gains and settled flat, dragged by profit booking amid thin trading volumes due to New Year holidays.

The Sensex dipped 32 points or 0.04 percent to settle at 85,188.60 on Thursday. During the day, it hit a high of 85,451.70 and a low of 85,101.52, fluctuating 350.18 points. The Nifty went up marginally by 16.95 points or 0.06 percent to end at 26,146.55.

In calendar year 2025, the Sensex gained 7,081.59 points or 9 percent, while the Nifty advanced 2,484.8 points or 10.5 percent.

Key reasons behind market decline

1) FII selling: Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,597.38 crore on Wednesday, extending their selling streak to seven consecutive sessions. In December 2025, FIIs were net sellers to the tune of Rs 34,349.62 crore.

2) Thin trading volumes: Liquidity remained thin as most major global markets, including the US, Europe and several Asian markets, were closed for New Year’s Day.

"Indian equity markets step into the first trading session of 2026 on a cautiously optimistic note, set against a globally quiet backdrop as most major international markets remain closed for New Year’s Day. With the US, Europe, and several Asian markets shut, global cues are limited and early liquidity is expected to remain thin," Ponmudi R, CEO of Enrich Money, said.

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3) Profit booking: Profit booking was seen in FMCG and pharma stocks. Shares of tobacco companies declined sharply after the government imposed a new excise duty on cigarettes.

ITC shares fell more than 6 percent to Rs 378.45, leading losses on the Nifty 50 index, while Godfrey Phillips India tumbled 10 percent to Rs 2,484.80 in morning trade.

"Benchmarks are expected to remain sideways with selective buying amid thin trading volumes due to New Year holidays across global markets," Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, said. He added that quarterly earnings, India-US trade negotiations and the Union Budget would guide the near-term market trend.

4) Sensex Weekly expiry: Thursday also marked the first weekly derivatives expiry of calendar year 2026. Expiry sessions tend to be volatile as traders square off or roll over positions, leading to sharp intraday movements.

5) Rupee depreciation: The rupee depreciated 11 paise to 89.99 against the US dollar in early trade, weighed down by persistent foreign fund outflows. The domestic currency opened at 89.94 and weakened further during the session.

Technical Analysis

Anand James, Chief Market Strategist at Geojit Investments, said on the Nifty Outlook "While the rise above 26,027 set off upsides yesterday, the morning star candlestick pattern formed thereof encourages us to pursue more gains today. That said, the closing hour's decline prompts us to have the downside marker in the 26,100 vicinity for initial upside plays aiming 26,300 and beyond. We will wait for a direct fall below 26,027 to completely abandon upside plays."

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