Unmesh Sharma: Actually, there are a lot of layers in the question itself. So I’ll try to address all of those.

The first is that globally, while liquidity is sloshing around, you can see from the net selling in India itself, that there is some risk. In fact, if you look at last week’s data, there is a lot of flow happening into China.

Now, this makes two points. One is that does that mean that people are going away from risk? The answer is probably not. Why would you move from India to China. China, probably the risk is higher at this moment in time, given all that going on over there.

But what’s happened is that there is some value bias which is coming in. I don’t know if you’ve seen but across sectors, the valuations of a lot of very good quality Chinese companies is actually in single digits versus India where the whole market itself is over 20.

So what’s happening is that there is some reallocation of portfolios happening. So that’s at the FPI level and which is why that connects with your second point as to why FPIs are selling. So there is a reason for that to happen. So it’s not necessarily a complete risk off but at the same point, because there is enough liquidity but this.

Now then you come to the second point, which is something that is to a large extent unprecedented. Now, this is where you actually compare it to what happened in Hong Kong, China from 2004 to 2008.

Now, what’s happened is that this huge wave of financialisation of savings and people participating in the market has started and which is what I think you can see from the SIP flows.

Now there are a lot of layers in that but what’s actually effectively happened is that all the bouts of selling which have come from the FPIs is just being completely absorbed by the domestic market.

Now, here what happens is that this is a little scary in a sense. If you look at the aggregate data, I think the FPI stake in India Inc peaked at around 23% and is down 5–6%. Now, maybe I’m too old school but earlier if someone had told me that 5% of India Inc is going to be sold by foreigners and nothing will happen and so the market has actually gone up.

So, you know, it is also somewhere where people like us also have to take a little bit of humble pie because I actually thought the market will fall this year, and that’s been the call. Wherever I go, people keep asking me this that you had said that it’s going to fall but what’s happening now.

But now what I think is happening is that if you compare it with the example of what happened in Hong Kong, China this can go on for a bit.

The only reason why this would stop and that is the second part of, you know, I’m pre empting what you will then say, how does this stop. One is that as of right now, there seems to be not much interest in looking at aggregate valuations.

So if the company is delivering earnings then keep buying. The counter corollary, which supports this thesis is the fact that if you see it even in this earning season you see a small miss and the stocks fall dramatically, which kind of supports my thesis that a lot of this participation can go away if there is disappointment. This is happening globally, not just in India.

The second is that there has to be something else to buy because this liquidity is real, and people have now kind of made money in the market or at least not lost money in the market now for a long period of time. So either real estate, or working capital, or people start deploying money elsewhere, I think this will continue for a bit longer.

Now in this scenario, it’s a little tough and honestly, that’s exactly what’s happened to a lot of market participants including us, thinking that at some stage this will not stop and it has not stopped. I think this will continue for a bit.