'Interesting to see whether domestic liquidity remains at elevated levels'

Chirag Setalvad, Head - Equities of HDFC AMC, expects some foreign interest coming back to Indian shores after the huge outflows in 2025.

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He tells Ananya Grover that with the markets having been rangebound for some time now, and smallcaps and midcaps underperforming, it would be interesting to see whether domestic liquidity remains elevated. Excerpts:How you do read the markets?

Overall, given the underperformance in 2025, valuations relative to other markets have now normalised. The correction in smallcaps and midcaps was warranted given the sharp run up and it is getting easier to identify opportunities. The measures rolled out by government and the RBI and an IndoUS trade deal, should help support the economy. This could translate into a better earnings above average.

Are you seeing any contra opportunity?