Few market participants will stick their neck out to give a target for the Sensex during Samvat 2065, a stark change from the last year, which reflects the overall mood in the Indian equity markets.

Indian markets have been reeling from the impact of the global financial crisis, which has so far led to the closure of nearly 50 banks in the US, sounding the death knell for the investment banking industry.

Since hitting a peak of 21,000 in January, the BSE Sensex has fallen continuously.

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"One can't predict the index levels, but definitely the sentiment would change by the next Diwali as our economy has not been impacted as much as the US and other European economies," said Samir Arora, a fund manager at Singapore-based Helios Capital.

Enam Securities is the only brokerage in the pack that has given a Sensex call this time. Enam says the Sensex should touch 15,000 by the next Diwali. Most traders believe that markets will recover by the next Diwali, even though fundamentals of the Indian economy may worsen slightly with elections looming large.

Prabhudas Lilladher managing director Amisha Vora said there would be some recovery in the markets over the next 12 months, but for the economy, things would get worse. Companies generating cash and debt-free companies will be preferred stocks.

For investors with a time horizon of two years, equity remains a strong asset class. On the other hand, investors should wait till the middle of the next year to get into real estate, Vora added.

According to Citigroup, economies such as China and India, with either larger domestic markets or greater policy flexibility, are more likely to maintain relatively strong growth.

Nandan Chakraborty and Sachidanand Shukla of Enam Securities say there will be three phases - the agony of October-December 2008, the apathy of January-July 2009 and the stirrings of ecstasy, post-August 2009.

Emerging economies such as India will attract foreign institutional investor inflows once the global risk aversion subsides.

"We continue to believe that Indian markets offer strong medium- to long-term potential on the back of relatively-higher economic growth. Once the global risk aversion subsides and investors start looking for growth opportunities, strong economies like India should attract flows," said Sukumar Rajah, chief investment officer (equity), Franklin Templeton Investments India.

So far in 2008, FIIs sold equities in excess of $12 billion in the Indian markets. Domestic institutional investors, including mutual funds and insurance companies, bought equities worth $13.51 billion. Market participants feel that the next year will be active in terms of policy interventions.