Mumbai, Aug. 24 -- After a liquidity-driven rally over 2023-25, investors will pick stocks based on earnings performance in 2026-27, with large-caps likely to vie for Investor interest with small- and mid-caps (SMIDs) owing to compelling valuations and a slowdown in foreign investor selling, Pratik Gupta, chief executive and co-head, Kotak Institutional Equities, told Mint in an interview.

Gupta also believes that while the recent capital account measures by the Reserve Bank of India (RBI) would act as a buffer against currency headwinds, they would not be sufficient to eliminate the risks posed by a spike in crude prices on India's external account. Edited excerpts:

The key takeaway from Q1FY27 is that earnings have been materially bet...