Markets may remain in a tunnel for some time: Vallabh Bhanshali, Enam Securities

ET Now: If I look at global environment, after Greece it is Italy and looking at the way how Spanish and Portuguese bond yields have appreciated in last 4 or 5 days, do you think the European problem will get worst before it gets better?

Vallabh Bhanshali: I do not see things in that manner. Firstly, the globe is not facing unknown problems. Most of the problems have been identified well in time. They have been calibrated. Of course, you are looking at central solutions in terms of ECB and the governments at one end and then you are facing the problem which is very diffused and broad based such as unemployment, cutting of subsidies, cutting of jobs and so on. So it is a time process. It is a political process, but the measure of the problem is fairly under control. So, it is a very good situation to be in because that is we all know in life once you know the problem, you admit the problem, the solution starts to unfold. So, the world in the sense that the societies are seized of the problems, the societies have begun to respond.

The political response in Europe is completely unpredictable. Who could have said that people will take austerity of this kind? We kept worrying about PIGS that austerity will not be accepted by people. But people see the writing on the wall and they accept it and even more surprisingly you have politicians who are going out fairly in a civil manner which means they are ready to sacrifice their careers or they are ready to admit that they made a mistake and they must move out. Both are fantastic developments and the third one which is worth recounting is what's happening in the US. We thought that the US was a consumerist country and it had to obsessively consume, but we find the US citizen is smarter.

They are not borrowing, they are selling off homes to repay loans. They are not borrowing new money. So once a society shows a certain pattern of consumption in living, all the suppliers have a consumer, they understand and they start building solutions. So that is how innovation comes. So the innovation engine which has generally led in the US is now going to be visible in many places in the world, including Japan