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Consumer inflation fell to a record low of 1.54% in June, below the estimate from economists polled by Reuters, who had predicted that inflation would fall to 1.7%. This is a sharp drop from May's 2.18% inflation number. 

The drop has been aided by a fall in food prices, and is significantly lower than RBI's medium term target of 4%. Consumer inflation rates have stayed below RBI targets now for eight months in a row, opening an opportunity for an interest rate cut from the bank. The RBI had against expectations kept the interest rate unchanged in June, but MPC discussions indicated that it could review the stance if the trend continued. The RBI's MPC is set to meet in August. 

Several strong value stocks (with Piotroski Score > 6 - this score calculates the firm's financial strength) are currently trending above all their SMAs, and have very high technical scores. These include Goa Carbon (Trendlyne wrote about this company on April 12), Graphite India (ICICISec recently issued a BUY report on this stock), Bhansali Engineering Polymers, and more.

Somewhat expensive stocks which are currently trading above broker targets and have high P/Es, like Avanti Feeds, are also still gaining in share price. See the full screener list of bullish value stocks. 

The global bull market is driving the Sensex and Nifty to new highs as well.

India is benefiting from some key global trends, including 1) low oil prices, although that trend may now start to reverse with falling inventories in the US and lower production by OPEC 2) A strengthening rupee cheering foreign investors investing in Indian markets. Previously, a volatile rupee tended to hit stock market returns when it lost altitude against the dollar. In the past couple of quarters, the rupee has been relatively stable.

A third advantage for India has been the strong financial results in key industries, including infrastructure, construction and banks - despite the NPA issue. The coming earnings results will give a clearer picture of the growth trend across various sectors, especially IT and Banking. IT has been struggling with a weakening outsourcing sector, and banks are still struggling against NPAs weighing down their balance sheets. 

So far, a strong US market has been a crucial fourth factor. The US market has been gaining on good fundamentals and what traders perceive as a market-friendly US administration. Despite the scandals plaguing the Trump administration, the government has been pushing for policies that limit market regulations introduced by the previous Obama administrations.

However, the scandals are gaining ground with the release of emails showing that Trump's son met Russian lawyers to get information on Hillary Clinton. A deepening investigation against the White House may hobble the administration significantly, and the US markets have yet to fully account for that risk. 

Photo: Appaiah

US stocks were on a roller-coaster on Tuesday, falling early in the day by 100 points after Trump Jr's release of emails, which indicated that the Trump campaign knew of the Russian government's efforts to help Trump and hobble Clinton in the November elections. A Russian government-linked lawyer had offered Donald Trump's son access to "sensitive information" against Hilary Clinton.

Concerns that the Russian controversy will impact the US President's ability to govern have worried markets. The Dow recovered over the day, ending on a slight gain.