The Indian equity market has risen almost 25 per cent in the last five months.

Though numbers do not suggest a compelling risk-reward investment scenario, analysts say long-term prospects still seem to favour India.

Most analysts said the market has shown a great degree of maturity in ignoring almost all short-term negative news thus far: The Indian election results saw the market crashing to a low of 4,500 levels. Foreign funds pulled out en masse in May and for the next two months, the economy was in the throes of uncertainty pertaining to the monsoon.

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More recently, soaring inflation and oil prices have acted as a dampner but the market seems to be shrugging off all negative news and investors are showing a resilience not seen earlier.

This, analysts said, is a sure indicator that investors are more mature now and believe in the long-term Indian story.

Nandan Chakraborty, head of research at Enam Securities, said, "The market has reacted positively to favourable government policies on infrastructure, negative real interest rates and imminent tax-breaks which are fuelling retail buying, especially in mid-cap stocks."

He added that India is growing at a reasonable price -- as can be seen in the high quality of initial public offerings and capital expenditure plans on the table.

These two factors are fuelling the attractiveness of India as a major independent emerging market destination rather than just a part of the Asia allocat4ions.

"This may lead to a blue-chip charge," he said.

Liquidity in the markets is good, and domestic investor interest in equity markets is high, other analysts said.

Foreign fund inflows have been steady and have been strong all through this year, except in May. Analysts at a local brokerage said underleveraged consumers and corporates, coupled with high business confidence, backed by one of the best demographic profiles are positive factors for the Indian economy and markets.

Vijay Saraf, chief operating officer, Centrum Finance, said, "India is now also emerging as a strong independent identity, which will prove crucial in attracting foreign money in the long-term."

In a recent report, Enam has highlighted that of the BRIC countries, Brazil and China are strongly commodities-driven and hence more risky, Russia and China don't have free markets, while India and China have the best demographic profiles.