A well below-par first-half proved costly as City went two up through Kevin De Bruyne and Phil Foden.
The second half was a lot better and Raul Jimenez pulled one back, but Gabriel Jesus sealed a 3-1 win for the visitors late on, and Nuno said: "In the game there are always positives and negatives, and we know how important the moments are in both boxes.
"This is what really changes the game. I think we were bad defensively in the first half, in our box.
"In the second half, we should have been more clinical as we had really, really good moments."
Wolves were outclassed by Pep Guardiola's men before the break but looked like a different side in the second period, with Jimenez scoring from a Daniel Podence cross while the hosts missed four other golden opportunities.
"We had good moments against a fantastic team in City," said Nuno.
"The second half, we believed and created them a lot of problems. It was clear we performed better in the second half. Why we didn't do it in the first half, we'll see.
"We were not comfortable in the game. City were breaking us with a lot of circulation and possession of the ball.
"We adjusted better in the second half and we were able to see a different dynamic of the team. We created chances and good moments of football, and we scored late in the game.
"We knew one goal could change everything and the boys believed until the end. But there are lot of things we should and must improve."
Wolves saw Fernando Marcal limp off early on, being replaced by Ruben Vinagre just seven minutes in.
The Brazilian was able to walk off the pitch and Nuno hopes the injury is not too serious.
"We must assess. It was the beginning of the match and we are going to assess. Let's see and hope it's not too much," said Nuno.
"He said he felt something that was not right. We made the substitution so things didn't get worse."
One of the positives on the night was the performance of Podence, who Nuno praised afterwards while also urging him to be more clinical in front of goal having missed two good chances.
Another thing for Wolves fans to be happy about is the imminent signing of Nelson Semedo.
The Portuguese is coming in from Barcelona for £29million having already completed a medical, but Nuno did not want to say too much ahead of his signing being officially announced by the club.
He added: "What I said before is that we had our target identified and we are working on it. I'm sorry but I cannot go much further than this."