Back in 2005, when a whole-time member of the Securities and Exchange Board of

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India, Madhukar, said in a speech at the Bombay Stock Exchange that Sensex would touch 16,000, the whole world poured scorn on him.

Sensex was then a tad below the 8,000-level and the market highly volatile.

As a representative of the market regulator, he was not supposed to make predictions about stock markets. The statement cost him dear as the resultant media attention made him look like a fool and left the regulator cross and politicians, whether they understood stock indices or not, pouncing at the opportunity and demanding Madhukar’s head.

Two years later in 2007, when Sensex zipped past 16,000, Madhukar, who was then a non-executive director in a government-run company, was elevated to the status of a fortune-teller.

The point is, in stock markets, what looks crazy today may be real in flesh and blood tomorrow.

After billions of dollars vanished from the world following a massive failure in the US banking system that saw stock markets worldwide melting faster than ice in early 2008, nobody in their right mind would have thought Sensex, which recorded a low of 8,160 on March 9 this year would hit 17,000 before the year ends.

So, the logical question first — will Sensex hit 30,000 in calendar 2010?

“Frankly, I don’t think it will happen so soon. I personally think the index would oscillate in the 12,000-24,000 range,” said Rajesh Jain, managing director of Pranav Securities.

What would it take for Sensex to take out peak 30k?

If the economy fires on all cylinders, interest rates remain benign to keep the demand for products and services alive and global fund mangers take a special liking to India like never seen before, it could happen. “The GDP growth rate should be somewhere above 12 per cent per annum and Sensex earnings per share above Rs 2,000. The Banking sector has to perform really well as it has more than 20 per cent weightage on Sensex. Along with it, capital goods, information technology, oil and gas add up to about 60 per cent of Sensex weightage. So, all companies on these factors should perform really well,” said Manish Sonthalia, fund manager, Motilal Oswal Financial Securities.

Even as all these factors would lay the foundation for a big bang bull run, the much-needed propellant should come from the foreign institutional investors (FIIs), who have been pivotal drivers of Indian stock markets for quite a long time now.

“Unless and until you see something like say $50 billion coming into Indian markets, 30,000 on Sensex looks far away from reality,” said Sonthalia.

The highest FII inflow in the history of Indian markets in any given calendar year has been $17.6 in calendar year 2007. That kind of an inflow saw Sensex gaining 6,344 points or 45 per cent.

Now, $50 billion is 2.84 times the money, which found its way into domestic markets in 2007. Thus, if that kind of money flows in, on a conservative basis, we can expect at least twice the gain of what Sensex made in 2007. A 90 per cent upside from the present level of 16,692, would convert to 15,022 points – perching Sensex at a whopping 32,015 points!

But then, what if it happens? Business will be roaring for those who are in the stock markets to the extent that probably every father would want to marry off his daughter to a stockbroker.