India will be one of the fastest growing economies in 2011 and hence should continue to remain as a favorite investment destination. Accordingly, we expect market sentiments to remain positive in 2010.

An old saying goes, "Women and markets are unpredictable." What can be a better testimony to the unpredictable nature of markets than 2009. It caught every wise man on the wrong side—with the Indian and global markets staging the most spectacular comeback. In 2009, the markets saw a roller coaster ride, with the markets touching new two-year lows, and yet the exuberance of improving liquidity, thumping election results and strong domestic demand crafted one of the quickest recoveries, where Nifty was one of the best performing indices globally. The 2009 market performance is in contrast with that of 2008, where Nifty underperformed most of the major global market indices.

Given the backdrop, where are the markets headed in 2010? In order to crystal-ball the market performance for 2010, we look at various indicators, which include the global economic outlook, Indian economic outlook, interest rate expectations, FII and domestic participation in the equity markets, and the current valuation of the markets.

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