Market technically set up nicely and cleanly after corrections
Despite volatility in early 2026, Srivastava expresses comfort with current market positioning. The correction phase has eliminated excesses from the system, and importantly, foreign institutional investors (FII) are showing early signs of returning to Indian markets.
Srivastava said: “We are just seeing the slivers of FII slows coming in.” “Technically, the market is set up nicely, very cleanly the corrections have taken place and the good stocks are doing extremely well.”
Q3 earnings presented a mixed bag, but companies in protected industries delivered particularly strong results. Banks, auto companies, and stock exchanges posted fantastic numbers, demonstrating that core sectors continue performing regardless of broader volatility.
The hidden success of 2025: Why most investors had a brilliant year
While media narratives focused on equity market struggles, Srivastava reveals that 2025 was an excellent year for diversified investors who looked beyond just Indian stocks. “Most investors would be closing out 2025 quite well compared to just the stock market,” he explained. The success came from multiple sources:
Select Indian equities: Chose stocks delivered extremely well despite index volatility
Gold and silver: Provided a bonanza for precious metals holders
International stocks: Global diversification added significant returnsThe key lesson: focusing solely on domestic equity indices misses the complete performance picture. Investors who maintained diversified portfolios across asset classes and geographies enjoyed strong returns.
However, 2026 opened with a sucker punch, creating new challenges that demand careful stock selection and patience as US trade deal details emerge.
The monopoly advantage: Stock exchanges lead 2026 winners
Srivastava’s investment thesis for 2026 centers on monopoly and oligopoly businesses with structural competitive advantages. Stock exchanges top this list as the pure monopoly sector positioned for continued excellence.
Recent results validate this view. Both equity and commodity exchanges reported superb earnings, demonstrating pricing power and market dominance that should persist throughout the year.
2026 sector winners: Monopolies and structural leaders
| Sector | Investment Rationale |
| Stock Exchanges | Pure monopoly with excellent results; strongest structural advantage |
| Automobiles | Performing fantastically well; strong export momentum |
| Banking | Consistent performance; defensive quality with growth |
| Healthcare | Steady performer; structural tailwinds remain intact |
| Telecom | Approaching inflection point; data center opportunities emerging |
Telecom deserves special attention as it approaches an inflection point. If companies successfully pivot to data centers and adjacent services, the sector could offer compelling growth alongside its oligopoly structure, though patience is required.
The retail valuation problem
While select monopolies look attractive, consumer retail companies face severe valuation challenges that make them questionable investments despite strong underlying businesses. “India values retail companies selling kapras (clothes) at god knows what kind of AI company valuations,” Srivastava stated bluntly. The disconnect between business fundamentals and market pricing in retail makes it difficult to justify new positions, regardless of brand strength or market position.
The harsh truth about Indian IT: Dumbest management teams
In perhaps his most controversial assessment, Srivastava delivers a scathing critique of Indian IT companies and their management teams, arguing that years of mismanagement have left them structurally disadvantaged. “Indian IT companies have just had the dumbest management teams across the board. It is not one company, everybody,” he declared. The core failure? An obsessive focus on dividends rather than reinvestment in innovation and capabilities.
“All they needed was dividend, dividend, dividend. They never thought to invest and the day of reckoning has arrived,” Srivastava explained.
While some companies are now signaling willingness to change, he questions whether it’s too late.
The fundamental business model relied heavily on H-1B visa-enabled body shopping to the United States. With H-1B policies tightening, this revenue stream faces existential challenges.
Invest in technology where it’s born and bred: The US alternative
Rather than trying to find value in struggling Indian IT companies, Srivastava recommends a simple alternative: invest directly in US technology markets where innovation actually occurs.
“Luckily for Indian investors, we have the US market to invest in,” he noted. Anybody who wants to invest in tech, I would seriously suggest go to the US market and not the Indian market because the Indian market is such a small subset of services, you don’t get the exposure.
US-focused ETFs provide broader technology exposure and access to companies at the forefront of innovation, rather than services businesses dependent on labor arbitrage and visa policies.
Srivastava admits he hasn’t tracked or owned Indian IT stocks for the past couple of years, seeing no compelling business proposition to justify the risk. With Indian regulations allowing foreign investment, there’s simply no reason te compromise on quality when superior alternatives exist.
Volatility rising: Why stock selection matters more than Ever
A critical observation about current markets is the increased volatility in individual company performance. Unlike previous periods with more predictable earnings trajectories, companies now deliver sudden surprises across sectors.
Earlier you could have a good predicted path to profitability or performance, now you have sudden surprises coming across the board from various companies, Srivastava observed.
This environment reinforces the importance of stock-specific research and maintaining cash reserves. “Good times are meant to be milked and therefore you sit with the cash for the bad times,” he advised, emphasizing tactical flexibility over permanent deployment.
The wild card: Waiting for US trade deal clarity
One major uncertainty hanging over 2026 is the pending US trade deal. While some sectors like shrimp exports and gems and jewellery show optimism, Srivastava urges caution until complete details emerge.
“We don’t know who the losers are at the end of the day. We don’t know who is going to pay for the oil,” he noted. The euphoria in select export sectors may be premature without understanding the broader economic implications and which industries might face offsetting challenges.
This uncertainty reinforces the need for patience and selectivity rather than broad market bets based on incomplete information.
Investment strategy for 2026: The contrarian playbook
What to buy:
- Monopoly businesses: Stock exchanges offer pure monopoly characteristics with excellent recent results
- Core sectors: Banks, autos, healthcare continue delivering regardless of volatility
- Inflection plays: Telecom approaching key turning point with data center opportunities
- US tech exposure: ETFs and direct US stocks for technology exposure instead of Indian IT
What to avoid:
- Indian IT services: Management failures and H-1B dependency create structural headwinds
- Retail companies: Valuations are disconnected from fundamentals despite good businesses
- Broad market bets: Rising volatility demands stock-specific selection over index exposure
The unchanging nature of markets
Srivastava’s overarching message is one of market continuity. Despite constant noise and narrative shifts, the same quality businesses in monopolistic or oligopolistic sectors continue performing.
“As we get older, we realize nothing much changes in the world, does it?” he reflected. Banks, exchanges, autos, and healthcare keep delivering results year after year, while overhyped themes and poor management eventually face consequences.
The challenge for 2026 lies not in identifying new revolutionary themes, but in maintaining discipline around proven winners, avoiding valuation traps in popular sectors, and looking globally when domestic options fall short.
For investors willing to embrace this contrarian, quality-focused approach while maintaining tactical flexibility through cash reserves, 2026 may prove more rewarding than the “challenging” label suggests. The key is remembering that in investing, as in life, the more things change, the more they stay the same.
Disclaimer: This report is based on expert market commentary and is intended for informational purposes only. It does not constitute financial advice. The views expressed regarding Indian IT companies and other sectors represent the opinion of the interviewee and may not reflect all market perspectives. Investors should conduct their own research and consult with financial advisors before making investment decisions.