India's wealth management industry is undergoing a significant shift as retail investors, particularly tech-savvy millennials, have grown rapidly during the COVID-19 pandemic, driving stock prices to record highs. Sonam Srivastava, founder of an advisory firm, Wright Research, has capitalized on this trend by offering stock portfolio recommendations to retail investors, attracting around 6,500 customers who have invested nearly 1 billion rupees ($13 million). Smallcase is part of a competitive landscape that includes online brokerage startups like Groww and Upstox, and the company plans to expand its offerings into new categories such as bonds and potentially cryptocurrency. However, some analysts warn that the influx of new investors may lead to overheated valuations, prompting concerns about fundamentals and market sustainability.

Sonam Srivastava's recommendations became popular among retail investors during the COVID-19 pandemic. Starting with a "multifactor" strategy based on quantitative research, she has added new themes such as "momentum," which aims to take advantage of a bull market, and another focused on small-cap stocks.

Here’s a gist:

• Sonam Srivastava started her own advisory business in Mumbai after the U.S. advisory she worked for scrapped plans to launch in India.

• She offers stock portfolio recommendations on Smallcase, a site that executes trades on investors' behalf.

• Srivastava's recommendations became popular among retail investors, primarily aggressive millennial investors aged 25 to 40, during the COVID-19 pandemic.

• India has seen a major shift in its wealth management industry, with retail investors growing rapidly and driving stock prices to record highs.

• The number of individual demat accounts, which keep an electronic record of securities, has significantly increased during the pandemic.

• Startups like Groww, Upstox, and Smallcase are competing to capture business from tech-savvy millennial investors.

• Smallcase offers portfolios of stocks and ETFs, providing a portfolio approach to investing in equities.

• Smallcase had 4 million customers in January 2020, and the company recently raised $40 million in funding.

• Some analysts warn that valuations may be overheating due to the influx of new retail investors.

• The stock market has experienced a recent correction, causing investors to consider fundamentals, the economy, and valuations.

• The industry is unsure if investors will stay after a market downturn, but there is a fundamental change in how people think about asset allocation.

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