Sunday, 6 July 2025

JP Morgan Guide to Markets 30Jun2025

 

JP Morgan Guide to Markets 30Jun2025
 
 
 
(This is for information purposes only. This should not be construed as a recommendation or investment advice even though the author is a CFA Charterholder. Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)
 
 
JP Morgan Asset Management publishes a comprehensive presentation every month end, containing various slides on global markets, especially those relating to the US markets.
 
This is a very useful and informative guide for financial market professionals or FMPs.  This "JP Morgan Guide to the Markets" can be accessed here. The following are some of the highlights / images presented in this guide: all the data are at the end of 30Jun2025:
 
 




















 

 
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Related Blogs: 

JP Morgan Guide to Market Mar2025 

JP Morgan Guide to Markets Feb2025

JP  Morgan Guide to Markets Dec2024

JP Morgan Guide to Markets Oct2024

JP Morgan Guide to Markets Sep2024

JP Morgan Guide to Markets Jul2024

JP Morgan Guide to Markets Jun2024

JP Morgan Guide to Markets Mar2024

JP Morgan Guide to Markets Dec2023

JP Morgan Guide to Markets Sep2023

JP Morgan Guide to Markets Aug2023

JP Morgan Guide to Markets Apr2023

JP Morgan Guide to Markets Mar2023

JP Morgan Guide to Markets Jan2023

JP Morgan Guide to Markets Dec2022

JP Morgan Guide to Markets Oct2022

JP Morgan Guide to Markets Sep2022

JP Morgan Guide to Markets Jul2022

JP Morgan Guide to Markets Apr2022

JP Morgan Guide to Markets Jan2022

-------------------
 
Read more:
 
Blog of Blogs Theme-wise 
 
Weblinks and Investing
 
India Fixed Income Data Bank
 
Indian Economy Data Bank 

India Forex Data Bank 
 
 
The Elusive Current Account Surplus: What 25 Years Data Reveal About India's Trade Balance 30Jun2025
 
India Flagship ETFs with Low Fees and Fair Trading Volumes 12Jun2025 
 
Low Expense Ratios, High Returns: Why Passive Equity Funds Matter 06Jun2025 
 
Mutual Fund Asset Class Returns 02Jun2025 
 
Currency Woes Put Pressure on US Equities and Bonds 22Apr2025
 
JP Morgan Guide to Markets 31Mar2025
 
Loss of First-mover Advantage
 
India's Most-Profitable Sectors: Where Big Earnings Are Made 10Mar2025  
 
NSE Indices Comparison 31Dec2024
 
JP Morgan Guide to Markets 31Dec2024
 
Corporate Groups and Listed Companies 29Dec2024
 
Corporate Governance Concerns - Indian Companies 13Dec2024
 
Opinion on Maharashtra Seamless 15Nov2024
 
Wars and Wealth Protection
 
Mutual Fund Asset Class Returns 30Sep2024
 
Primer on Global Capability Centres - India is World's GCC Capital 
 

-------------------

Disclosure:  I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.

------------------------

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Monday, 30 June 2025

The Elusive Current Account Surplus: What 25 Years of Data Reveal About India’s Trade Balance 30Jun2025

 

The Elusive Current Account Surplus: What 25 Years of Data Reveal About India’s Trade Balance 30Jun2025

 
 
 
(This is for information purposes only. This should not be construed as a recommendation or investment advice even though the author is a CFA Charterholder. Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.) 
  
 
 
Current account (CA) surplus is a rare phenomenon in India and there is nothing to celebrate about it.
 
Financial market participants (FMPs) on Twitter / X seem to have been carried away by the current account surplus reported by Reserve Bank of India (RBI).
 
People appear to be jubilant about quarterly CA surplus of India for the fourth quarter (Jan-Mar2025) of FY 2024-25. But how is quarterly print important when for all the three quarters (Apr2024 to Dec2024) we ran a deficit?
 
A few days ago, RBI reported Balance of Payments (BoP) figures for the fourth quarter (Jan-Mar2025) as well as the full year 2024-25. India recorded a current account surplus of USD 13.5 billion (1.3 per cent of GDP) for the Jan-Mar2025 quarter – though during the first three quarters we had a total current account deficit (CAD) of USD 36.9 billion, resulting in full year CAD of USD 23.3 billion.  
 
 
2. A snapshot of Current Account 

India’s Balance of Payments (BoP) is divided into two main accounts: the Current Account and the Capital Account. 

Two components of current account are: Merchandise trade (exports and imports of goods) and Net Invisibles.
 
Net Invisibles essentially represent transactions that don't involve the physical movement of goods. Key items in net invisibles are: Services exports and imports, Transfers and Income (for more on this, see update 29Jun2025 with chart 101 of blog Forex Data Bank).
 
If exports (goods and net invisibles) are higher than imports (goods and net invisibles), a country will have a surplus on the current account (CA). If exports (goods and net invisibles) are lower than imports (goods and net invisibles), a country will have a deficit on the current account.
 
3. One Quarter Does Not Define the Year
 
A single-quarter surplus, especially in the fourth quarter (Jan-Mar 2025), doesn’t tell the full story if the overall trend throughout the rest of the year shows a deficit.

It's crucial to analyse the annual or cumulative data for a larger picture rather than focusing on isolated periods.

The first three quarters (Apr-Dec2024) showing a deficit indicating that imports (goods and services) are exceeding exports for a significant portion of the year.

A surplus in just one quarter (such as fourth quarter) could be an outlier and might not be sustainable over time.

The full-year data is more reflective of the underlying structural health or lack thereof of the current account. 
 
A single-quarter surplus can easily be an anomaly due to temporary factors like seasonal changes in trade flows, shifts in imports or exports, or even speculative movements in currency. 
 
 
4. Analysis of 25 years CA Balance data 
 
In the past 25 years, India experienced current account surplus only in four years, and in the rest of the years, it was current account deficit (see Chart 99 of Forex Data Bank).
 
An analysis of India's current account balance (CAB) over the past 25 years (2000-01 to 2024-25) provides a detailed look into the trends and patterns of the current account surplus and deficit. Here are the key insights:

a) Frequency of Current Account Surplus:

Out of 25 years, India never experienced a current account surplus in 13 years (not even in a single quarter), which means the country’s current account was more often in deficit.

In 12 years, at least one quarter saw a current account surplus. However, it’s important to note that the current account surplus was rare, occurring in just 22 quarters out of 100 quarters over the 25-year period of this analysis.
 
b) Years in full-year surplus:

The four full years where India achieved a current account surplus:

2020-21

2003-04

2002-03

2001-02
 
2020-21: This year saw a COVID-19-induced contraction of 5.8 per cent in real GDP. The current account ended in a surplus of USD 23.9 billion largely because of a sharp decline in imports (due to reduced domestic demand and global disruptions) even as exports were affected.  
 
2003-04: This year was somewhat an outlier, with a USD 14.1 billion CA surplus despite strong GDP growth (7.9%). This could be attributed to low imports and strong exports at the time driven by high global demand. The impressive economic performance in 2003-04 was though on a low base (3.8% growth in 2002-03).

2001-02 and 2002-03: These were years of Vajpayee government in which economic growth was subdued though Vajpayee government implemented significant economic reforms. Low economic growth rates in these periods meant reduced demand for imports, while the economy was still on a mild growth path (for India GDP data, see 
update 30Jun2025 with chart 56 of Indian Economy data bank). 

c) Quarterly surplus trends:
  
In 12 years, at least in one quarter, there was current account surplus (CA surplus). Out of the 48 quarters (in these 12 years), 22 quarters experienced CA surplus (see chart below).

Fourth Quarter (Jan-Mar): Of the 22 quarters with a current account surplus, 10 quarters with surplus occurred in the fourth quarter (Jan-Mar) of the respective financial year. This shows a seasonal pattern, suggesting that in the final quarter of the fiscal year, India’s trade balance and external payments may be in a more favorable position.

If you look at the big picture of 100 quarters, only in 22 quarters India experienced current account surplus – most of these quarters are low economic growth periods of Vajpayee government between 2000-2001 to 2003-04.

 
Chart: India Current account balance - quarterly / yearly data where the current account balance is in surplus (a snapshot of 25 years data from 2000-01 to 2024-25):
 

 
Data sources for the above chart:
 
RBI press release 27Jun2025 Developments in India overall balance of payments 
RBI DBIE: Table 196: India overall balance of payments - quarterly - USD 
India Forex data bank
Indian Economy data bank 
 
 
5. Concluding Remarks
 
India’s current account balance is predominantly in deficit over the past 25 years, with surpluses occurring only sporadically. For the most part, current account surplus in India coincided with tepid economic growth as shown above with data analysed over 25 years (100 quarters).  
 
The fourth quarter of the fiscal year tends to have a higher likelihood of surplus due to seasonal export cycles and changes in import behavior. As such, it's premature to be gleeful about one-off events like quarterly surplus in current account. 
 
India’s manufacturing sector has been one of the major limiting factors in its ability to sustain a current account surplus, unlike countries like China which is a global manufacturing powerhouse. 

While India has significant strengths in services exports (such as information technology, business process outsourcing and other services), manufacturing has not reached the same level of scale or efficiency, which makes it difficult to achieve long-term current account surpluses.  
 
However, services exports alone are not enough to offset the large trade deficits that India runs in goods (especially in crude oil, gold and electronics imports). 
 
In the Indian context, a current account deficit of up to 2 per cent of GDP is considered manageable and drives economic growth. Because India needs imports of capital goods and other machinery to run factories in India. 
 
Imports are needed for future exports also, for example, gems and jewellery sector. India imports raw materials like gold, diamonds and other precious metals, which are then processed in India and exported as high-value finished goods. 

Beyond 2 per cent CAD, India becomes vulnerable to external shocks, like, in 2011-12 and 2012-23; when CAD shot up by more than 4 per cent of GDP.

- - -
 
 
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Additional data:
 
India GDP growth rates:
 

 
-------------------
 
Read more:
 
Blog of Blogs Theme-wise 
 
Weblinks and Investing
 
India Fixed Income Data Bank
 
Indian Economy Data Bank 

India Forex Data Bank 
 
 
India Flagship ETFs with Low Fees and Fair Trading Volumes 12Jun2025 
 
Low Expense Ratios, High Returns: Why Passive Equity Funds Matter 06Jun2025 
 
Mutual Fund Asset Class Returns 02Jun2025 
 
Currency Woes Put Pressure on US Equities and Bonds 22Apr2025
 
JP Morgan Guide to Markets 31Mar2025
 
Loss of First-mover Advantage
 
India's Most-Profitable Sectors: Where Big Earnings Are Made 10Mar2025  
 
NSE Indices Comparison 31Dec2024
 
JP Morgan Guide to Markets 31Dec2024
 
Corporate Groups and Listed Companies 29Dec2024
 
Corporate Governance Concerns - Indian Companies 13Dec2024
 
Opinion on Maharashtra Seamless 15Nov2024
 
Wars and Wealth Protection
 
Mutual Fund Asset Class Returns 30Sep2024
 
Primer on Global Capability Centres - India is World's GCC Capital 
 

-------------------

Disclosure:  I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.

------------------------

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Thursday, 12 June 2025

India Flagship Equity ETFs with Low Fees and Fair Trading Volumes 12Jun2025

 

India Flagship Equity ETFs with Low Fees and Fair Trading Volumes 12Jun2025

 
 
 
(This is for information purposes only. This should not be construed as a recommendation or investment advice even though the author is a CFA Charterholder. Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.) 
 
(see update 18Jun2025 at the end of the article) 
 
 
 
 
As passive investing gains traction in India and as has been highlighted over the past three years in this blog, exchange-traded funds (ETFs) tracking major equity indices have become a popular vehicle for investors seeking broad market exposure with low management costs. 

However, not all ETFs are created equal. To help investors navigate the growing landscape, this article identifies flagship India equity ETFs using four key selection filters

low expense ratios,
low tracking error, 
large assets under management (AUM), 
and high average daily trading volumes. 

These criteria ensure not only cost efficiency but also liquidity for smooth trade execution. Focusing only on ETFs tracking primary Indian indices—such as the Nifty 50 and Sensex—this analysis provides a data-backed shortlist for both retail investors seeking exposure to Indian stock market.
 
However, this is just for educational purposes and is strictly not meant to be investment advice.  
 
 
Blog continues below...
 
-------------------
  
Related Blogs on Equity Passive Funds:
 
Low Expense Ratios, High Returns: Why Passive Equity Funds Matter 
 
Crux of Kotak Debt Hybrid Fund  
 
How to Buy Nifty Midcap 150 Index 
 
Equity ETFs and Equity Index Funds Compared
 
India Equity ETFs Worth Considering
 
Analysis of Nifty 100 Low Volatility 30 Index 
 
India Equity ETF Risks and Returns 
 
Nifty BeES: Making Risk-Less Profits 
 
Junior Nifty BeES ETF: How to Make Higher Profits
 
-------------------
 
 
2. Select equity ETFs, their asset size, expense ratios, trading volumes, etc.
 
The table attached provides a snapshot of 14 equity ETFs based on four major stock indices, namely, Nifty 50, Sensex, Nifty Next 50 and Nifty Midcap 150.
 
The data include, AUM or assets under management, expense ratio, tracking error, daily average volume, daily average traded value in rupee terms and daily average number of trades.
 
The volume data presented here are for a period of one year between 12Jun2024 and 11Jun2025.
 
 

Observations from the above table:
 
> only volume data from NSE India stock exchange are taken, whereas BSE volume data are ignored, as ETF volumes on BSE are thin in most cases
 
> ETFs managed by public sector-owned mutual funds are ignored as they suffer from EPFO risk and may be detrimental to the interests of long term retail investors
 
> ETFs based on BSE Sensex may not be suitable for most of the investors because their trading volumes are very thin
 
> as can be observed from the above table, for example, ICICI Prudential BSE Sensex ETF has daily average volume of less than 10,000 (trade value Rs 84 lakh); and LIC MF BSE Sensex ETF has just a daily average volume of about 250 (traded value Rs 2.30 lakh)
 
> among the primary stock indices, ETFs based on Nifty 50 are the most popular -- their asset size is huge, expense ratios are very low between 0.03 and 0.05 per cent, their tracking errors too are very low and they have high trading volumes, in addition to high daily average number of trades
 
> for example, Mirae Asset Nifty 50 ETF has daily average trading volumes of 3.45 lakh, with daily average value of transactions being Rs 883 lakh
 
> ETFs based on Nifty Next 50 and Nifty Midcap 150 as presented in the above table too have decent trading volumes and considerable traded value -- the liquidity is good enough for retail investors 
 
> many ETFs based on the above four flagship indices have AUM of less than Rs 200 crore; as such, they are ignored for the purpose of this analysis
 
> only top three or five ETFs based on an index are considered for this; as making a comprehensive analysis of all ETFs is outside the scope of this write-up 
 
> you may have observed most of the 14 ETFs illustrated above are from just three fund houses, namely, Nippon India, ICICI Prudential and Mirae Asset -- we ignored PSU-owned ETFs here 
 
 
3. Checklist before investing in equity ETFs
 
While ETFs offer simplicity, transparency and cost-efficiency, investors should still take a few essential precautions before investing:

a). Understand the underlying index -- Ensure you're familiar with the index the ETF tracks—be it the Nifty 50, Sensex, Nifty Next 50, or Midcap 150. Each has a different risk-return profile. For example, midcap indices may offer higher returns but come with greater volatility.

b). Look beyond just low expense ratios -- While expense ratios are crucial, they aren’t the only cost. Tracking error, bid-ask spreads, and trading costs also impact your overall returns. A slightly higher expense ratio may be acceptable if the ETF offers tighter tracking and better liquidity.
 
c). Evaluate liquidity: both in volume and value -- ETFs priced below Rs 100 often witness higher trading volumes on stock exchanges compared to those priced above, say, Rs 200. As such, focusing solely on unit volumes can be misleading. It is equally important to consider the average daily traded value in rupee terms, which provides a more comprehensive view of real liquidity. 
  
d). Avoid thinly-traded ETFs -- ETFs with very low trading activity may have wider bid-ask spreads, making it harder to buy or sell eficiently. This can hurt returns, especially for larger or more frequent transactions.
 
e). Watch out for PSU-backed ETFs -- ETFs managed by PSU-owned AMCs may carry unique risks—such as concentrated ownership by EPFO or other government institutions—which can impact liquidity and price discovery. Some of these ETFs are excluded from this analysis for that reason (PSU is public sector undertaking).
 
f). Understand the NAV-Price gap (premium or discount) -- ETFs trade on the stock exchange like shares, so their market price can deviate from the NAV (Net Asset Value), especially in low-liquidity situations. Persistent or large gaps between the NAV and trading price can lead to buying above fair value or selling below it—eroding potential returns.
 
In the past six months, there are several instances where ETFs based on foreign stock indices, like, Nasdaq and Hang Seng, have quoted at exorbitant premiums of 20 to 25 per cent above their underlying NAV or net asset value. 
 
g). Tax Implications -- Equity ETFs based on Indian stock indices are taxed like equity-oriented mutual funds in India (however, it's better to consult your tax advisor before considering any investments).

 
4. Concluding remarks
 
Choosing the right India equity ETF goes beyond simply tracking a popular index. By applying filters such as low expense ratios, strong asset size and consistent trading volumes, investors can identify funds that offer better cost efficiency, reduced tracking error and ease of entry and exit. 

As the Indian ETF ecosystem continues to mature, these parameters will become even more critical in distinguishing good investment avenues from less efficient ones. 
 
Ultimately, a disciplined approach to ETF selection can significantly enhance portfolio performance—especially in a setting where minimising costs and maximising liquidity are key.

Stay informed, review fund metrics periodically and make sure your ETF choices are in line with your long-term investment goals.
 
Investments discussed here are for informational and educational purpose only; readers must be guided by their investment / financial / tax advisors before considering any investments. 

 

 
 
- - - 
 
 
 
P.S.: The following update is added after the blog was published on 12Jun2025:
 
On 18Jun2025, I came to know EPFO started investing (wef 03Jul2023) in ETFs based on Nifty 50 and Sensex indices from Nippon  India MF and ICICI Prudential MF, in addition to those from SBI MF and  UTI MF (the details were highlighted on 19Jun2025 in charts 51 to 55 of Indian Economy data bank).
 
Retail investors are better off if they avoid investing in the following 10 ETFs, due to large investor risk or EPFO risk > 
 

 
 
References:
 
Weblinks to check Volumes of the ETFs are given below: 
 

ETF Volumes data: 

Volumes for ETFs are extremely important to consider before investing.
 
NSE Market Watch - Exchange Traded Funds / ETFs (to check volumes)
 
Nifty 50 ETFs (only top 5) with highest AUMs as of 31May2025 (ignored ETFs of PSU-owned AMCs) 
 
Nippon India ETF Nifty 50 BeES

ICICI Pru Nifty 50 ETF

Mirae Asset Nifty 50 ETF

HDFC Nifty 50 ETF

Aditya Birla SL Nifty 50 ETF 
 
BSE Sensex ETFs (only top 3) with highest AUMs as of 31May2025 (ignored ETFs of PSU-owned AMCs)  
 
ICICI Pru BSE Sensex ETF
 
LIC MF BSE Sensex ETF
 
HDFC BSE Sensex ETF 
 
Nippon India BSE Sensex ETF (not traded on NSE)
 
 
Nifty Next 50 ETFs (only top 3) with highest AUMs as of 31May2025 (ignored ETFs of PSU-owned AMCs)
 
Nippon India ETF Nifty Next 50 Junior BeES
 
ICICI Pru Nifty Next 50 ETF
 
Mirae Asset Nifty Next 50 ETF

 
Nifty Midcap 150 ETFs (only top 5) with highest AUMs as of 31May2025 (ignored ETFs of PSU-owned AMCs)
  
Nippon India ETF Nifty Midcap 150 
 
Mirae Asset Nifty Midcap 150 ETF 
 
ICICI Pru Nifty Midcap 150 ETF 
 
(note: you may have observed most of the 14 ETFs illustrated above are from just three fund houses, namely, Nippon India, ICICI Prudential and Mirae Asset -- we ignored PSU-owned ETFs here)
 
 
AMFI India weblink for tracking error data 
 
ETFs and their unique EPFO risk 
 
 
-------------------
 
Read more:
 
Blog of Blogs Theme-wise 
 
Weblinks and Investing
 
India Fixed Income Data Bank
 
Indian Economy Data Bank 

India Forex Data Bank 
 
 
India Flagship ETFs with Low Fees and Fair Trading Volumes 12Jun2025 
 
Low Expense Ratios, High Returns: Why Passive Equity Funds Matter 06Jun2025 
 
Mutual Fund Asset Class Returns 02Jun2025 
 
Currency Woes Put Pressure on US Equities and Bonds 22Apr2025
 
JP Morgan Guide to Markets 31Mar2025
 
Loss of First-mover Advantage
 
India's Most-Profitable Sectors: Where Big Earnings Are Made 10Mar2025  
 
NSE Indices Comparison 31Dec2024
 
JP Morgan Guide to Markets 31Dec2024
 
Corporate Groups and Listed Companies 29Dec2024
 
Corporate Governance Concerns - Indian Companies 13Dec2024
 
Opinion on Maharashtra Seamless 15Nov2024
 
Wars and Wealth Protection
 
Mutual Fund Asset Class Returns 30Sep2024
 
Primer on Global Capability Centres - India is World's GCC Capital 
 

-------------------

Disclosure:  I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.

------------------------

CFA Charter credentials  - CFA Member Profile

CFA New Badge 

CFA Badge