ndian stock markets are likely to extend their winning streak after a holiday-truncated week saw the Nifty gain 3 per cent amid poor volumes and participation.

Weak crude prices and reform measures such as diesel decontrol, gas price hike and opening up of the coal sector to private companies should see Indian equity outperformance continue globally.

One can now say with conviction that Indian markets are "de-coupled" from their global counterparts as far as a secular rally is concerned. The domestic economy is rebounding. Commodity prices are near four-year lows, inflation has hit three-year lows, bond yields are falling, interest rates have peaked and reform measures are coming. All these developments augur well for the economy and stock markets.

The GDP is likely to rise to 6.5 per cent in a years' time. A real GDP between 6-8 per cent with inflation pegged at 6-7 per cent would imply a doubling of the nominal GDP within a five-year time frame. That would mean higher equity market capitalisation too.

Industrial activity is likely to pick up and will not be a drag on GDP like in the past few years. Significant reduction in fiscal and current account deficits are likely to act as tailwinds for the markets. Foreign exchange reserves are slated to improve given the strong FII and FDI flows.

This week, global markets recovered sharply with the Dow Jones making its sharpest weekly rally since January 2013 and gaining 4.1 per cent. Oil continued to weaken as supply/demand mismatch reached its highest levels in recent times. Gold prices also softened this week after seeing their best rally in the last 2 months.

Global markets may continue to be a concern for domestic investors. Europe and China slowdown, geopolitical issues and a hike in interest rates in US could result in some volatility, but they are unlikely to stall the India story.

Recap of last week's performance:

The Nifty gained 3 per cent this week, while the Bank Nifty ended up 3.4 per cent. The star outperformer was the auto sub-index on the NSE, which saw gains of 5.7 per cent amid strong festive sales.

Weaker-than-expected results from IT heavyweights saw tech stocks lagging the market rally. The CNX IT index ended the week up marginally by 0.33 per cent. The rupee was also range bound and fluctuated between 60.75 & 61.3, while the 10 year bond yields also were traded between 8.35-8.45 per cent.

Sanjeev Bhasin is an independent market analyst. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.