Sensex at 20000, how much steam is left ?

The index touched 20000 for the first time before its final close at 19978. The Indian Market capitalization has added close to a trillion dollars in last 20 months. Since 1993, when Foreign Institutional Investors (FII) were first allowed to buy Indian Shares, they pumped in a total of $66.2 billion, of this more than a third amount about $ 25 billion has come since February 2006.
The question that is now in mind of every investor in Dalal Street, will the FIIs continue to pump in money and will the bull run continue or not?
To understand this let us first discuss why FIIs are betting high on Indian economy. India’s economy is more dependant on domestic population than on foreign markets for its sustenance. The domestic market in India is ever increasing with the demand surging to new peaks. Now the question arises why this demand is increasing and how long will the trend exist. To solve this enigma, we should understand the population distribution and composition. We will see that Indian population comprises of a huge percentage of Young generation who has started to earn and is adding value to economy. Secondly there is shift from rural to urban economy taking place which is increasing the demand of goods and services in places never heard of before.
India’s exports are growing at a very high rate, among one of the fastest in the world. The India Inc has some of the world class companies and corporates are developing into global players day by day. They have consistently outperformed the market expectations and have wonderfully grown both in topline and bottomline.
All these factors lead to huge dollar inflows, making Rupee(INR) stronger against Dollar. Again investors like countries where currency is strong and now is investing in a much bigger way.
But a cautionary note ought to be sounded. There are some indicators that the market may be reaching peak. FIIs are not active as they used to be. Sebi data showed they took out $600 million from the market during this period.