Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, expects returns to be more moderate and stock-specific in 2026, not the broad surge seen earlier.
According to her, the triggers for the market are the start of a global rate cut cycle, continued stability in inflation, and whether earnings upgrades follow through in banks, manufacturing and select services. However, the challenges sit on the global side, she said in an interview to Moneycontrol.
On the upcoming central banks policy meetings in December, if either central bank (RBI or Federal Reserve) holds back unexpectedly, short lived volatility in rate sensitive pockets can be likely, but the directional shift remains towards gradual easing, she feels.
Do you expect the strong market momentum to continue in the coming calendar year? What are the major triggers and challenges for the market?
Momentum can carry into the new year, but the character of the market will shift. Index levels are at record highs, domestic flows are steady and earnings revisions are still positive. That creates a supportive base. The triggers that matter now are the start of a global rate cut cycle, continued stability in inflation, and whether earnings upgrades follow through in banks, manufacturing and select services.
The challenges sit on the global side. A slowdown in US growth after a long AI driven tech cycle, volatile foreign flows and stretched pockets in small and thematic names can create air pockets. I expect returns to be more moderate and stock specific, not the broad surge we saw in the previous leg.
Do you think the new labour codes will be a significant reform by the government? Is implementing these labour laws challenging amid surplus labour and limited job creation?
The labour codes are one of the more meaningful structural reforms, because they replace a fragmented legal landscape with a cleaner framework for wages, social security and industrial relations. Over time, this can raise formalisation, reduce compliance friction and give companies clearer visibility on labour costs.
The friction lies in execution. States are at different stages of readiness, MSMEs may struggle with transition, and the codes alone cannot solve the deeper issue of surplus labour and insufficient job creation. To work, they must be paired with investment in skilling, manufacturing capacity and a digital compliance layer that reduces paperwork. If implemented well, the productivity impact will be felt over several years.
Are you bullish on platform businesses given their operating leverage potential?
I am constructive, but selective. The operating leverage story is real. As platforms scale, the incremental user costs drop and margins expand sharply, which we are already seeing in a few listed names where contribution margins and free cash flow have improved. But the market no longer rewards “growth at any cost”.
The platforms that deserve a premium today are those with clear unit economics, strong governance, diversified revenue, and regulatory resilience. Models tied to real economic activity in finance, commerce or enterprise tech look stronger. I remain cautious on platforms that rely only on GMV (gross merchandise value) growth, subsidies or weak switching costs.
Do you think the rally in the IT sector has started pricing in the expected earnings growth for the next calendar year, or is it driven by hopes that the India–US trade deal may be concluded before the holiday season?
Both factors have driven the rally. The earnings environment has improved. Deal conversions are stabilising, large programs are being scaled up and AI led transformation work is becoming a non trivial contributor.
At the same time, sentiment has been bolstered by optimism surrounding an India-US trade agreement and the prospect of smoother market access. A good part of the near term recovery is now in the price, especially for large caps that have re rated from the lows.
From here IT will likely trade more on delivery, budget stability in the US and evidence that AI revenue is not just narrative.
Are you becoming increasingly positive on the chemicals and insurance sectors?
Chemicals are finally showing signs of bottoming out after a difficult down cycle. Margins compressed sharply over the last couple of years, but recent numbers show early stabilisation. Input prices have normalised, destocking is easing and specialty volume growth is picking up in select segments.
Structurally, China plus one and tighter global environmental norms still favour Indian producers, but this remains a cyclical and capital heavy space, so stock selection has to be bottom up.
Insurance is a cleaner long term story. Penetration is still low, financialisation of savings is rising and private players with good distribution and underwriting discipline are in a strong position to compound. Regulatory noise can create short term swings, but the structural picture is positive.
Do you expect the RBI as well as the US Federal Reserve to cut interest rates in their December meetings?
Both central banks have the space to ease. Inflation in India has fallen towards the lower end of the tolerance band, liquidity conditions are improving and the economy can absorb a small cut without risking overheating. A 25 basis point cut is a reasonable base case.
The Fed is also in a position to cut once more as growth cools and the labour market softens, and market pricing already reflects that. The bigger story is not one meeting, but the broader pivot to easier policy. If either central bank holds back unexpectedly, you may see short lived volatility in rate sensitive pockets, but the directional shift remains towards gradual easing.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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