The Indian stock market commenced 2026 on a largely subdued and cautious note, as evidenced by modest initial gains and subsequent corrections in early January. While the first trading session on January 1, 2026, saw benchmark indices like the Nifty 50 and Sensex close marginally higher, this reflected more of a 'cautious optimism' than a strong bullish start. Profit-taking at higher levels, coupled with ongoing geopolitical concerns and trade tensions, contributed to a decline in key indices in the following sessions, with both the Sensex and Nifty 50 recording losses in early to mid-January. Despite the overall cautious sentiment, the automotive sector emerged as a significant gainer, experiencing a notable rally. This surge was primarily driven by positive December sales data and an optimistic outlook for double-digit industry growth in 2026, supported by factors like GST 2.0 reforms. Major auto stocks contributed substantially to this uplift, providing a crucial counterbalance to the broader market's weakness. Conversely, shares of cigarette maker ITC witnessed a significant decline. This downturn was largely attributed to the implementation of a new tax on the sector, leading to projections of earnings pressure from multiple brokerages. ITC's stock experienced considerable drops on specific days in early January and even touched a 52-week low. The strength in the auto sector, therefore, played a pivotal role in offsetting the adverse impact of ITC's decline, preventing a more pronounced negative start for the Indian equity benchmarks.