Indian stock markets remained closed on Thursday for the Maharashtra Municipal Corporation Elections, with market expert Sunil Subramaniam defending the decision while criticizing the lack of advance notice. The sudden holiday announcement created operational challenges for market participants, though Subramaniam emphasized the economic impact remained negligible.

Expert Analysis on Holiday Impact

Sunil Subramaniam, speaking to ET Now, highlighted that the primary issue was not the holiday itself but the timing of the announcement. "The problem is that it was not announced well in advance. People could not plan for it," he said, noting that the sudden decision left investors, brokers, and institutions unable to plan effectively.

Subramaniam cautioned that markets must be prepared for unplanned disruptions, whether due to political developments, national mourning, or other unforeseen events. "These things are out of control. Markets have to adjust," he said.

Wednesday's Market Performance Before Holiday

The benchmark indices extended their declining trend on Wednesday, with both major indexes posting significant losses before the unexpected trading break.

The decline marked the seventh loss in eight sessions for both indexes, with concerns over potential US tariffs and continuous foreign institutional investor outflows weighing on market performance.

Democracy vs Market Operations

Subramaniam emphasized the importance of facilitating voting in India's democratic process. "In India, facilitating voting is critical. Everything possible must be done to ensure people exercise their right to vote," he said.

He argued that staggered shifts or partial working hours are impractical in Mumbai, where commuting times are long and voters must return to their home constituencies. "Someone living in Virar or Kalyan cannot realistically vote and return to work within a few hours," he explained.

Global Context and Market Resilience

Subramaniam noted that Indian markets already follow a different holiday calendar from global peers. "The US is closed on Thanksgiving but we are open. We are closed on Diwali when global markets are open. Markets do not need to be open 24/7 to remain efficient," he said.

Addressing economic concerns, he pointed out that a pause in trading could even shield retail investors during periods of heavy foreign institutional investor selling. Any adjustments related to derivatives or expiry resets are market-related rather than economic events.

Call for Better Planning

While supporting the holiday decision, Subramaniam stressed the need for advance planning. "That clarity is what was missing. The sudden announcement is the real challenge," he said, suggesting the holiday should have been declared when election dates were announced months in advance.

He highlighted coordination challenges within the financial system, noting that banks, exchanges, and intermediaries do not operate under a single authority for such decisions. "If banks are shut and markets are open, or vice versa, that creates further complications," he explained.

The Indian stock market has witnessed its most challenging start to a calendar year in over a decade, with market participants grappling with significant outflows and policy uncertainty. In the opening trading sessions of 2026, the markets have experienced substantial selling pressure, resulting in considerable erosion of investor wealth. The benchmark indices have struggled to find direction amid a confluence of domestic and international factors weighing on sentiment.

Market Performance and Capitalisation Impact

The scale of the market decline has been substantial, affecting the overall valuation of Indian equities. The performance metrics highlight the severity of the current market stress.

Foreign Investment Flows and Market Positioning

Foreign institutional investors have adopted an increasingly bearish stance on Indian markets, significantly impacting market dynamics. The FII positioning reflects deep concerns about near-term market prospects and policy developments.

Chakri Lokapriya, CIO-Equities at LGT Wealth, explained the market sentiment: "The market is kind of waiting for that one word called tariff. Until there is a kind of resolution, we are going to be range-bound because that creates a lot of uncertainty." Negotiations are expected to restart this week, though this development has provided only limited relief to market participants.

Technical Analysis and Trading Ranges

From a technical perspective, the benchmark indices are displaying limited conviction and have entered defined trading ranges. Market analysts are closely monitoring key support and resistance levels to gauge future directional moves.

Rupak De, Senior Technical Analyst at LKP Securities, provided his assessment: "In the short term, sentiment is likely to remain weak with potential for further downside. Support is placed at 25,600, below which a deeper correction may unfold. On the higher end, resistance is placed at 25,835."

Market Outlook and Investment Strategy

Fund managers and market experts are maintaining a cautious stance while acknowledging potential opportunities for long-term investors. The current market environment is characterised by multiple uncertainties that are likely to persist in the near term.

Harsha Upadhyaya, CIO at Kotak Mahindra AMC, noted: "While the valuations may have corrected to some extent in the largecaps and certain midcaps, at the broader end of the market, the valuations are still expensive. Until and unless there is a real pickup in earnings growth for small caps, we may not see all-around positiveness."

Arbind Maheshwari, Head of India Equities at BofA Securities, outlined expectations for 2026: "In CY26, Nifty returns will likely be driven by earnings growth rather than valuation re-rating, as Nifty trades near +1SD (~21-21.5x 1Y forward PE), leaving limited scope for further expansion unless earnings accelerate sharply."

Key Market Factors

Several factors are contributing to the current market environment:

• Policy Uncertainty: Delays in India-US tariff deal negotiations
• Budget Expectations: Upcoming Union Budget in February with focus on capital expenditure
• Earnings Season: Ongoing quarterly results providing mixed signals
• Valuation Concerns: Expensive valuations in broader market segments

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, advised: "What smart investors should do in uncertain, volatile times like now is to remain invested and continue investing in fairly valued quality growth stocks for the long term."