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Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin is a PhD and received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Time Series Analysis with GRETL

This video shows key time-series analyses techniques such as ARIMA, Granger Causality, Co-integration, and VECM performed via GRETL. Key dia...

Tuesday, 23 January 2018

The Indian Market in 2008 Vs The Market Today

On the 10 year anniversary of one of the greatest market crashes in India's recent history here is an interesting comparison:

Year
Nifty P/E
USD/INR
GDP
NPA's (Trillion)
2008
>  25
< 45
> 9
< 1
2018
> 27
> 63
< 7
> 6
sources: Craytheon.com, RBI

It was a runaway rally in 2008 much like it is now. We had a market peak at a P/E ratio in excess of 25 as is the case now. The major difference being the Rupee has depreciated significantly now and our GDP is much lower. Also the banking system is saddled with almost 10 times more NPA's than was the case in 2008. So if you are tempted to think "Is this time different?" Think again!
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Cash - 40%
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Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.