More of greed than fear in the global markets at this juncture? There is some greed, clearly. In a sense we can definitely have a correction; bond spreads are very low, credit spreads are low. So, it won't take much to set off a correction, most particularly as it is nearly end of the year. The key feature of Asian markets this year has been China.China was the only market in Asia outperforming the Asian benchmark. One reason you haven't seen much foreign buying in India is because foreign investors have been selling India to buy China as they are still underweight China.

What is your outlook for India vis-a-vis China? What's changed in my portfolio is I have raised China since 2016. I had reduced India by 2 ppt but I raised it again after the recap announcement. My base case is to be structurally three times overweight India. That partly reflects my bullishness on India, but there is another aspect. I think the neutral weighting in India is stupidly low. The weighting of India in Asia Pacific ex-Japan is only 8%. There are a lot of good bottom-up companies I would own in India regardless of the macro story. The only way I am going to be underweight India is if the rupee is going to halve in value. In India, I have got a concentrated position. My favourite in India has been the financial asset place, which has been big beneficiary of demonetisation.

Oil is a big factor. Are you worried? The Middle East news flow is short-term negative. Given how dramatic the news flow is, it is amazing oil hasn't rallied more. It could rally more but in the long run, I just think oil has real structural issues because the US shale is becoming a swing producer, and that's why Saudi Arabia has to reduce its dependence on oil. I am not going to slash India rating just because oil is going up.

What is your return expectation from India over the next one year? India can return 15-20% annually in rupee terms. Let's say I am an Indian saver, I would favour equities over bonds. I have got no problem adding balanced funds if you want to be a bit more conservative, but I would definitely not hold my money just in bonds. If they really sort the banking system out, then those returns can go higher than that

Is strong domestic flow an Indian phenomenon or is it happening elsewhere as well? These mutual fund flows in India are amazing because this is what people were waiting for in the country, but what's incredible is that there were no flows until Modi was elected. It started with the BJP winning, but the real acceleration this year seems to me is not a coincidence that the acceleration has happened after demonetisation. There are more flows now into equities than bonds. This is a structural positive because it means the (Indian) stock market isn't dictated solely by foreign buying or selling. 

Any similarities between this bull-run and the previous ones? The big bull-run in India was between 2002 to 2009. That's totally different from this bull run because then it was more fundamentally based and there was a private sector investment cycle. This bull-run has been in the absence of a pick-up in profits.

When do you expect private capex to pick up? My base case is that the main reason for that has been the banking system issue. If the banking system is sorted, that problem  should be addressed.

Do you have a view on interest rates in India? People think interest rates have bottomed in India. I am not sure that's right because they have still got real rates. In a world where the US doesn't tighten as much as people think or it actually reverses policy next year, you can definitely lower rates in India. It would be wrong to assume that rate cuts are over in India.