New Delhi, Dec. 22 -- Nilesh Shah, MD of Kotak Mahindra AMC, says investors should have moderate return expectations from the Indian stock market in 2026. He believes returns will come from selective sectors and stocks rather than a broad-based rally. In an exclusive interview with Mint's Nishant Kumar, Shah says the worst of valuation excesses could be behind us, even as they are at a substantial premium in the small-cap segment. Apart from the stock market, Shah shared his views on the Indian rupee's fall, sectors he is positive about, FIIs, and his key expectations from the Union Budget 2026. Here are the edited excerpts of the interview:

Markets are near all-time highs, but beneath the index, many stocks are significantly below their...