Why stock selection matters more than ever: Wright Research's Sonam Srivastava explains
With Indian markets trading under pressure despite improving valuations, Wright Research founder highlights opportunities in industrials, pharma and financials.
- Nov 6, 2026,
- Updated Nov 6, 2026 12:03 PM IST
Equity market investors, who have seen lacklustre returns over the past two years, received a Diwali gift of sorts as benchmark indices surged on Thursday, November 5, and extended their gains on Friday, even as global markets slumped.
The BSE Sensex jumped 2,000 points on Thursday, while the Nifty 50 index surged 576 points as Democrats made big gains in the US midterm elections and crude oil prices cooled. On Friday morning, the Sensex was trading more than 575 points higher, while the Nifty was up over 100 points.
Despite Thursday's gains, the Sensex and Nifty 50 were still down more than 6% in 2026 at the close. Returns since January 2025 have also been flat. Is the worst over for the markets, and are better days ahead?
Sonam Srivastava, founder of Wright Research, believes valuations suggest the market may be close to a bottom.
“We are at a cheap level, especially if you compare India to other emerging markets or compare India to its historic values,” Srivastava told Business Today. However, she did not rule out further declines before a recovery.
Beyond valuations, she said, the key drivers would be how foreign institutional investors’ view India and whether an unwinding of the AI trade brings Indian markets back into focus.
In recent weeks, industry experts have increasingly called on the government to lower or scrap the long-term capital gains tax to make Indian markets more attractive. Finance Minister Nirmala Sitharaman has signalled that the government may be willing to consider the concerns raised by anxious investors.
Foreign portfolio investors invested Rs 22,693 crore in India's equity market in November through November 5, 2026. For the year so far, however, they remain net sellers, with outflows of over Rs 2.72 lakh crore.
Even as sentiment improves, Srivastava said, India as a whole may still be a difficult bet, with sectors such as fast-moving consumer goods (FMCG) having underperformed. Active stock selection may, therefore, be important.
“Active investing in that regard in India might be the better way to look. There are pockets of growth in India. I don't see a reason for overall euphoric growth. But selective stock selection would be quite powerful,” said Srivastava.
The September-quarter earnings season has so far been a bright spot, she noted. While IT sector results may not have been attractive, she said, growing AI use cases point to a shift in the sector.
Many small- and mid-cap companies have also delivered strong earnings. Industrial companies have strong order books, she said, while pharma is another major bet in her portfolio.
“We have almost 30% pharma across CDMO (contract development and manufacturing organisation), API (active pharmaceutical ingredients), hospitals, etc. where we are seeing interesting earnings,” said Srivastava.
She was also bullish on financials, particularly banks, which have faced selling pressure over the past few months. Srivastava said banking stocks had been a “victim of the massive FII selling in the Indian market”.
“Fundamentally, these companies have actually done well. Credit growth has been decent, pressure on balance sheet is not that high,” she said.
Interest rates have started rising, with the Reserve Bank of India raising the repo rate by 25 basis points last month. She believes this interest rate cycle should also benefit the financial sector.
However, Srivastava cautioned that India would not be able to “breathe easy” if crude oil prices remained elevated. “Should prices stay elevated for a couple more quarters, it will be difficult for consumption, FMCG companies... and further policy support may be needed,” she said.
What about gold?
Gold prices are in a cooling-off phase after reaching a peak, she said. While the short-term direction is difficult to predict, she remains positive on the long-term outlook, with central banks around the world continuing to increase their gold reserves and support demand.
Equity market investors, who have seen lacklustre returns over the past two years, received a Diwali gift of sorts as benchmark indices surged on Thursday, November 5, and extended their gains on Friday, even as global markets slumped.
The BSE Sensex jumped 2,000 points on Thursday, while the Nifty 50 index surged 576 points as Democrats made big gains in the US midterm elections and crude oil prices cooled. On Friday morning, the Sensex was trading more than 575 points higher, while the Nifty was up over 100 points.
Despite Thursday's gains, the Sensex and Nifty 50 were still down more than 6% in 2026 at the close. Returns since January 2025 have also been flat. Is the worst over for the markets, and are better days ahead?
Sonam Srivastava, founder of Wright Research, believes valuations suggest the market may be close to a bottom.
“We are at a cheap level, especially if you compare India to other emerging markets or compare India to its historic values,” Srivastava told Business Today. However, she did not rule out further declines before a recovery.
Beyond valuations, she said, the key drivers would be how foreign institutional investors’ view India and whether an unwinding of the AI trade brings Indian markets back into focus.
In recent weeks, industry experts have increasingly called on the government to lower or scrap the long-term capital gains tax to make Indian markets more attractive. Finance Minister Nirmala Sitharaman has signalled that the government may be willing to consider the concerns raised by anxious investors.
Foreign portfolio investors invested Rs 22,693 crore in India's equity market in November through November 5, 2026. For the year so far, however, they remain net sellers, with outflows of over Rs 2.72 lakh crore.
Even as sentiment improves, Srivastava said, India as a whole may still be a difficult bet, with sectors such as fast-moving consumer goods (FMCG) having underperformed. Active stock selection may, therefore, be important.
“Active investing in that regard in India might be the better way to look. There are pockets of growth in India. I don't see a reason for overall euphoric growth. But selective stock selection would be quite powerful,” said Srivastava.
The September-quarter earnings season has so far been a bright spot, she noted. While IT sector results may not have been attractive, she said, growing AI use cases point to a shift in the sector.
Many small- and mid-cap companies have also delivered strong earnings. Industrial companies have strong order books, she said, while pharma is another major bet in her portfolio.
“We have almost 30% pharma across CDMO (contract development and manufacturing organisation), API (active pharmaceutical ingredients), hospitals, etc. where we are seeing interesting earnings,” said Srivastava.
She was also bullish on financials, particularly banks, which have faced selling pressure over the past few months. Srivastava said banking stocks had been a “victim of the massive FII selling in the Indian market”.
“Fundamentally, these companies have actually done well. Credit growth has been decent, pressure on balance sheet is not that high,” she said.
Interest rates have started rising, with the Reserve Bank of India raising the repo rate by 25 basis points last month. She believes this interest rate cycle should also benefit the financial sector.
However, Srivastava cautioned that India would not be able to “breathe easy” if crude oil prices remained elevated. “Should prices stay elevated for a couple more quarters, it will be difficult for consumption, FMCG companies... and further policy support may be needed,” she said.
What about gold?
Gold prices are in a cooling-off phase after reaching a peak, she said. While the short-term direction is difficult to predict, she remains positive on the long-term outlook, with central banks around the world continuing to increase their gold reserves and support demand.