New Delhi, Nov. 10 -- The one-year time correction has brought down the valuations even as earnings growth in the second quarter ended September has exceeded the low expectations, making Indian markets a better bet than other emerging peers, according to Manish Gunwani, head of equities at Bandhan Asset Management Co.

Positive macros and demand boost by fiscal and monetary stimuli will drive earnings higher and attract foreign investor inflows, subject to a weaker dollar, Gunwani said. Selective small-caps have the potential to grow much faster than large-caps, offering fund managers maximum potential for generating alpha through active stock selection.

Earnings expectations for Q2 were quite muted. In this context, the actual numbers h...