Morning Bell....Indian stock indices have extended their week's rally in early morning trade

Indian Markets

The Indian stock indices have extended their week's rally in early morning trade, with the NSE Nifty firming above 5000 and the BSE Sensex crossing the 16,700 mark. The undercurrent remains positive on the back of strong inflows into Indian shares and debt this month. Also, there are signs of some cooling in inflation, providing ample room to the RBI to unload its series of rates hikes. The Government has also taken a few encouraging steps to push attract FDI and lift economic growth.

Finally, the overseas markets have been sending positive vibes all through the month. Barring the mass downgrade of eurozone members by the S&P, there has not been any major bad news from Europe or elsewhere. On the contrary, economic data coming out of the US, China and Germany have been encouraging.

The series of debt auctions by the fiscally strained euro area nations have also went off well. Greece is also likely to seal a deal on the proposed debt swap with the private creditors. So, all these ingredients have helped support the risk rally this month. It remains to be seen of the momentum can be sustained going forward

US and European Markets

U.S. stocks advanced for a third straight session on Thursday, rising to fresh six-month highs, thanks to solid gains in financial shares. Dow Jones added 46 points, or 0.4%, S&P 500 rose 6 points, or 0.5%, Nasdaq composite increased 19 points, or 0.7%. All three indexes closed at the highest levels since July.

European stocks rose on Thursday to the highest level since the beginning of last August, as Spain and France successfully sold EUR14.6 billion in government bonds. Britain's FTSE 100 ticked up 0.7%, DAX in Germany rose 1% and France's CAC 40 added 2%.

Asian Markets

Today, the Asian markets are trading in the green with Shanghai & Hang Seng trading higher by 0.4% each. Nikkei & Strait Times are trading up by 1.3% & 0.5% respectively, while Kospi is up by 0.9%. SGX Nifty is trading higher by 26 points.

Currencies

The Indian Rupee extended its gains to the sixth straight session vs. the US Dollar on Thursday, driven by robust dollar inflows and a surge in local equities, as risk appetite improved on news the IMF would step up its role in tackling the euro zone debt crisis.

Commodities

Among the metals, Copper gained the most (2.4%) followed by Nickel, which ended higher by 1.1%. Zinc and Aluminium rose by 0.8% and 0.2% respectively. Oil for February delivery slipped 20 cents to settle at $100.39 a barrel. Gold futures for February delivery ticked down $5.40 to settle at $1,654.50 an ounce, losing momentum from earlier gains.

Outlook

The Indian Markets are likely to open higher following positive global cues. However, at higher levels it could witness some profit taking later during the day. Immediate upside targets for the Nifty remain at 5100. Downside supports to watch are at 4990-4931. Among the sectoral indices, Banks, Realty & Metals could do well.

Sources- hdfc security, india  infoline