View on market at its peak; how to select the pockets to put in fresh money? The first thing to remember is that this market is at peak in terms of absolute number and not in terms of absolute valuation. There is something called price and there is something called time. What was 31000 index let today will be completely different five years down the line or five years before in terms of price because of the value of time.

The second thing is it is easier to figure out companies which are avoidable so that at least you do not make unintended mistakes. We believe there are certain companies where floating stock is low and that low floating stock is resulting in higher valuation. We are clearly staying out of those stocks and those sectors. Also, there are a couple of sectors where valuations are pricing in exponential growth and our feeling is that while the long-term growth is accurate, the expectation of exponential growth cannot be met every quarter. So, we are trimming our exposure in those sectors and those companies.

Third, we are looking out constantly to figure out companies especially in some of the beaten down sectors where valuations are still reasonable to see if there is any trigger which will unlock the value or which will rerate these companies or sectors.

View on IPO market :Definitely in the IPO market today we are seeing one slight amount of euphoria being built because in many of the IPOs, floating stock is very limited and institutional investors or HNIs when they try to build a reasonable position, they end up absorbing the floating stock impacting the prices significantly.

One good thing which SEBI has done is that they have ensured that the quality of businesses which come out in IPO market are significantly superior compared to the past. In 2000, we had seen companies changing their name from finance company to tech company and coming out with an IPO and grabbing money. Today that is not possible. Unless and until, you have a solid business model you do not get clearances from regulatory authorities. We are talking about valuation and not about businesses anymore.

The second thing is that the market also has brought in certain kind of discipline, in 2008, we had seen so many companies whose business models were dependent upon a lot of future probabilities coming true, were able to raise money at exorbitant valuations. Today none of those companies are able to enter the market. They are all leveraged, they desperately need equity, their market cap today is lower than the IPO money or QIP money which they raised in 2008 and yet market is not willing to give them one naya paisa.

So in the IPO market or in the secondary market where floating stock is limited there is some amount of froth but it is about businesses where business model is real, good and solid. It is no longer about dubious business model.

Worry factor with the fact of synchronized move across the global markets :There are factors which are transient in nature and so the froth in low floating stocks and high exponential growth expectations are in small pockets of the market. Even if they burst, it is not going to have material impact on the overall market. Global synchronisation is something which we can manage, today domestic institutional investors and retail investors put together contribute far more inflows compared to FIIs and my favourite cliché has been that today to sell IPO you just have to visit Bandra Kurla Complex, Lower Parel and Chennai you do not have to go to London, Hong Kong, Singapore, New York.

So as long as there is a reasonable amount of redemption, let us say $10 billion, the local investors will be more than happy to manage that and that would not have material impact on the prices other than transient impact. But the real concern for the market is the earnings recovery. We have seen earnings growing only in certain pockets which are more related to consumer facing, the broad market earnings has been subdued, has been depressed, has remained almost constant for variety of reasons.

What we need to now see, how do earnings recover for the broad markets. What is happening in auto, auto components, domestic pharma, building materials and home improvement, cement? Will that start flowing into IT, generic pharma or export related pharma companies, public sector banks, infrastructure companies? We need broad based earnings recoveries for markets to sustain at current level.