By: Dr K C Gupta

SENTIMENTS

AAII Bull-Bear Spread -40.1% (very low). (Thursday-Wednesday)
$NYA50R, NYSE %Above 50-dMA 10.97% (oversold)
$SPXA50R, SP500 %Above 50-dMA 13.00% (oversold)
Delta MSI 42.3% (negative; stale?)

ICI Fund Allocations (Cumulative)
OEFs & ETFs: Stocks 60.36%, Hybrids 4.24%, Bonds 17.81%, M-Mkt 17.59%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 4.25-4.50%
FOMC 5/7/25+ hold
FOMC 6/18/25+ cut

Treasury

T-Bills 3-mo yield 4.28%, 1-yr 3.86%; T-Notes 2-yr 3.68%, 5-yr 3.72%, 10-yr 4.01%; T-
Bonds 30-yr 4.41%;
TIPS/Real yields 5-yr 1.38%, 10-yr 1.83%, 30-yr 2.28%
FRNs Index 4.250%
US Savings I-Bonds, Rate from 5/1/24 – 10/31/24 is 4.28%; the fixed rate is 1.30%, the
semiannual inflation is 1.48%.
For current banking rates, see www.depositaccounts.com/
Stable-Value (SV) Rates, 4/1/25
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.25%, RA 5.00%
Flexible RCP 4.50%, SRA 4.25%, IRA-101110+ 4.50%
TSP G Fund 4.250% (previous 4.250%).
Due to publication lag, the data above are as of the Sunday preceding.

MARKETS

A GLOBAL SELLOFF in stocks after the announcement of the US “reciprocal” TARIFFS
ranging from 10% to 49%. The baseline tariff on friends & foes was 10% but higher
depending on other unspecific factors. Illogically, they seemed to be based on percent
trade imbalances, not on any actual tariff data, so, the term “reciprocal” was misapplied.
India had cut duties on several items & agreed to increase defense & oil/gas purchases
from the US ahead of the announcement. The US tariff for India was still at 26%.

GOLD showed relative strength. Possible factors include the US policies on sanctions,
dollars diplomacy & tariffs; the global central banks bought more gold to diversify their
reserves. The gold-miners are finally catching up in 2025, but they sold off with equities.
Even after the market selloff, from the 09/28/22 low, gold is up +83.17%, gold-miner
GDX up +84.85%; YTD gold +15.82%, GDX +22.91%.

IT/TECH

RISE/Reliance (AMBANI) is entering the eSports gaming market through a partnership
with Danish BLAST.

ECONOMY

Economist Dr Poonam GUPTA has been appointed the 4th Deputy Governor of RBI
(central bank). She will have an ex-officio seat on the RBI MPC (Monetary Policy
Committee). MPC has 6 members, 3 from RBI (including the RBI Governor Sanjay
MALHOTRA as Chair) & 3 external members appointed by the Government of India.
The next MPC meeting is April 7-9, 2025 & the 2nd rate cut of 2025 is expected (3 cuts
are expected in 2025).

In 2020, the Indian Government rolled out a 5-year Production-Linked Incentive (PLI)
scheme to boost the “Make in India” objective. Several foreign companies have also
tapped into this program. The progress has been mixed – the improvements have been
highly sector-specific & the ambitious overall targets have been missed. Among the
factors are that the Indian economy is more service oriented (including IT) while the
production/ manufacturing sectors suffer from infrastructure deficiencies, excessive
regulations & a lack of skilled manpower. The Ministry of Commerce & Industry (MCI)
issued a positive report on the PLIs, but it’s unclear whether the PLIs will be extended.

FUNDS

Fund FEES in India are quite high. There are entry fees (front-load A), exit fees
(backend-load B), expense ratios (ERs; not well-defined), transaction fees
(commissions) & other fees. All these fees add up & are drag on fund performance.
However, as the fund industry evolves in India, the costs should come down as they
have in the US. In the meantime, the fund investors in India should focus primarily on
index funds & ETFs (165 in 2024). High fees for active funds may be acceptable in
some speculative or specialized areas with high expected returns.

Equity investments represent partial ownership of companies & they do keep up with
inflation & currency depreciation (an issue with rupee); there is volatility, of course.
Indian investors can buy mutual funds directly from fund firms (Direct Plans) or through
3rd parties (Regular Plans) – brokers, distributors, financial advisors. Regular Plans are
convenient but more expensive than Direct Plans. ETFs just trade like stocks. The
discount brokerage business is also growing in India.

US fund giant VANGUARD is opening a tech development center in Hyderabad. It will create 2,300 IT jobs over 3-4 years. The new Vanguard CEO Salim RAMJI was in India to review the progress. Vanguard has been a disruptor in the US fund industry by offering low-cost indexed & active funds (mutual funds, CITs, ETFs). But it hasn’t indicated any plans to offer funds in India. Vanguard, or another company like it, is needed in India to break the high-fee fund operations.
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