Q: The liquidity spike that you spoke about, do you think it’s played out or do you think there could be a last big spike left which can take us to levels which we can’t see today?

A: It’s hard to say; liquidity is such a hard thing to predict. Certainly, I don’t think I would have sat with you and predicted the way this market would come roaring back. I wouldn’t think anyone of us did. Therefore, what will happen in the immediate three-six months scenario honestly I have no idea about, but what seem certain is that the giant tap which was gushing out because of the US deficit because that deficit is going to start shrinking the surpluses on the other side in the China, Japan kind of countries are also going to shrink. Therefore, liquidity is going to find its way eventually into assets which people think are going to be longer-term more sustainable rather than one speculative burst- let me buy something, get a PE expansion, sell it to the last person standing and then get out - that’s the trade everyone doing. Everyone thinks they have greater fool theory that someone will buy me and bail me out, but the greater fool at the end of the chain has to see earnings which will take him over the next bridge and unless you can see that this is that way a treacherous market, unless you get that certainty of what’s going to happen to earnings. You can argue the case both ways that if the world indeed doesn’t recover as fast as you wish, the trade you have currently seen in oil and commodities going up and emerging markets going up may actually have a wave of disappointment. Equally you say recovery is actually better than what people are expecting - then you say, why do I need to be in so-called lesser preferred assets, let me go to the blue chip assets which one like; businesses which are global in character and the place to be therefore maybe the US exporters. If that currency is going to get weaken these have global franchises.

Q: Standing where we are now 14,000-15,000 Sensex or 900 S&P, do you think that risk reward is against the investor tilted in favour of risk?

A: It is always difficult because the index is always going to keep changing its character and different companies will come in and different companies will go out. If the theory on which one is working is that in a three year context it is almost inevitable that the Western economies don’t recover of the magnitude that people are expecting and there is currency weakness there, therefore it is more likely that the China, India use their resources and their demographics to their advantage and they grow. The big trade remains whatever India n China are going to consume are going to remain bullish. Also, whatever India and China are producing is going to remain in excess supply because the end consuming markets are just not large enough to take them in any more because they are overbuilt.

The other end of the spectrum will be what are exporters from these markets going to supply to these countries. That again has to fall within the domain of what are the Indians and the Chinese consuming. That to me is the big trade for the next 3-5 years. Depending on when prices fall off, it may well be that the index is at 15,000. But companies which fall into this kind of basket get mispriced. So, whether it is a 15,000 index I don’t care as long as one buys these assets at sensible levels prices.