About

Ahead of the Curve provides 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 include capital markets, banking, investment analysis, and portfolio management, and he has over 20 years of experience in the above areas, covering the US and Indian markets. He has several publications in the above areas. He currently teaches business and management students at CHRIST University. The views expressed here are his own and should not be construed as advice to buy or sell securities.

Friday, 29 April 2022

Jaws GAP - India Vix vs US Vix

There is quite a bit of underperformance in Indian market volatility compared to US market volatility since the COVID-19 crash as indicated by the jaws gap below. This should resolve soon with an upcoming spike in Indian market volatility and a significant fall in the Nifty Index.

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Economic Calendar

GMT-4		Event	Actual	Consensus
Friday, Jun 20
02:00	UK	Public Sector Net Borrowing	£17.686B		Revised from £20.155B
02:00	UK	Retail Sales (MoM)	-2.7%	-0.5%	Revised from 1.2%
02:00	UK	Retail Sales (YoY)	-1.3%	1.7%
02:00	UK	Retail Sales ex-Fuel (YoY)	-1.3%	1.8%	Revised from 5.3%
02:00	UK	Retail Sales ex-Fuel (MoM)	-2.8%	-0.5%	Revised from 1.3%
08:30	US	Philadelphia Fed Manufacturing Survey		-1
08:30	CA	Industrial Product Price (MoM)		0.0%
08:30	CA	Raw Material Price Index		-0.8%
08:30	CA	New Housing Price Index (YoY)
08:30	CA	New Housing Price Index (MoM)		-0.2%

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My Asset Allocation Strategy (Indian Market)

Cash - 40%
Bonds - 20%
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.