This week the markets completely ignored the Fed decision to taper and rallied substantially after the RBI kept rates on hold.

There's so much liquidity from foreign funds, that the same keeps pushing the markets higher. In fact, through the week they made staggering purchases and on Thursday net bought in the equity markets in excess of Rs 2000 crores.

Domestic institutions keep selling, while global liquidity drives FIIs to continue purchasing Indian stocks. Clearly, as we usher in 2014, the markets can only go higher from here.

This week for a change Reliance Industries drove markets higher, particularly on Friday when the last 30 minutes saw an almost 2 per cent jump in the stock, falling reports of a gas price hike.

As usual, IT stocks did well, with Infosys, HCL Tech and Tech Mahindra hitting fresh 52-week highs. It's possible that Infosys may see a slight reaction on Monday following the exit of V Balakrishnan from the company, making it the 8th top exit since Narayana Murthy tookover as Chairman of the company.

Banking stocks also saw a spectacular rally following the RBI decision to keep interest rates on hold. In fact, markets were expecting the RBI to hike repo rates once again.

Banking stocks are once again likely to see action on Monday and they could clearly be heading higher.
The Dow and the European markets continue to make new lifetime highs on robust economic recovery in Europe and the US.

Indian markets are likely to follow markets in the West and head higher. However, one must also exercise caution and book profits at higher levels.

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