THE POSITIVE SIGNS....

 THE POSITIVE NEWS IS THE HOPE TO THE BULLS AS THE ECONOMY IS DOING GOOD AND THE GOING ALSO GOOD........THE NIFTY 20% RISE FROM THESE LEVELS IS 7200+...EVERY THING NOW LOOKS ROSY AS WE ARE LOOKING THE POSITIVE SIDE.......????????

BSE Sensex seen rising 20 percent by end-2011 - poll

On Friday 24 December 2010, 11:44 PM

By Sumeet Chatterjee and Devidutta Tripathy

MUMBAI (Reuters) - The BSE Sensex is likely to rise nearly 20 percent by the end of next year, as a fast-growing economy and strong corporate earnings boost overseas portfolio inflows, a Reuters poll found.

The main 30-share Bombay Stock Exchange index will rise to 23,350 by end-2011 from close of 19,696.48 on December 8, according to the median response from 18 market participants, which include investment banks and brokerage firms.

The index in Asia's third-largest economy should rise 12 percent by mid-2011 to 22,000, the poll taken over the past week showed, higher than the 21,500 level seen in a September poll.

"The optimism on economic growth forecast, hopes of good earnings would continue to attract investors to India," said Neeraj Dewan, a director at brokerage Quantum Securities in New Delhi.

India, a member of the BRIC group of rapidly developing countries, is forecast to see economic growth of almost 9 percent in this fiscal year to March, with it accelerating further in following years, levels rivalled only by China.

Hopes of strong economic growth in India have led foreign funds to pump more than $29 billion into Indian equities so far in 2010, the highest ever, on top of the $17.5 billion purchased last year.

The overseas inflows have driven the main index almost 13 percent higher this year. Russia 's benchmark RTS index is up 11 percent this year, while Brazil is up about 1 percent and China is down 13 percent.

"They have poured in huge money this year. They might not match the same inflow next year, but a pullout is not likely," Quantum Securities Dewan said, referring to foreign institutional investors.

Analysts said that foreign investments in Indian shares were unlikely to be severely impacted by a string of corruption scandals that the government is currently mired in, though it could impact sentiment in the near term.

"The scandals will have a short-term sentiment impact and there will be greater scrutiny of corporate governance issues, but in the long run investors will focus on economy and company earnings," R.K. Gupta, fund manager at Taurus Mutual Fund, said.

Seven out of eight respondents in the poll said they did not think the current scandals would tarnish India's image as an investment destination.

PREMIUM VALUATION

Surging interest rates and global economic uncertainties as Europe struggles to contain its debt crisis are likely to be the main concerns for the Indian markets in the year ahead, analysts said.

The Mumbai stock index rose 81 percent in 2009 after the economy was spared the worst of the global economic downturn. It had posted its worst yearly loss in 2008, when it slumped by more than half.

The forecast for the BSE's Sensex index at the end of 2011 ranged from 17,500 to 26,600.

The index trades at 18.9 times forward earnings, higher than China's Shanghai Composite Index that trades at 15.4 times and Japan 's 16.9 percent.

(Additional reporting by Ami Shah; Polling by Bangalore Polling Unit; Editing by Jon Loades-Carter)

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