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
