Sensex to hit 29,900 by end of 2016: Poll

The stocks are expected to more than regain recent lost ground over the coming year, a Reuters poll found but analysts trimmed their outlook for a second time in six months in a reflection of the slow pace of reforms and global headwinds.

Still, Monday's poll taken over the past week showed the Sensex is likely to recover and rise to 27,500 by end-June 2016, an increase of 10 per cent from Friday's close but is almost exactly where it started this year.

Similar polls in September and June had foreseen the index higher by mid-2016, compared with the latest consensus. The index is then expected to rise to 29,900 by the end of 2016. That will be close to the record high of 30,024.74 hit on March 4 this year.    

The BSE Sensex was among the world's best performers in 2014, rising almost 30 per cent after Prime Minister Narendra Modi took office on promises of reforms to boost growth.

However, the government's inability to make a lot of headway and expectations the US Federal Reserve will start raising rates this week have seen investors dump emerging market assets, including these shares.

Foreign investors sold a net $1.7 billion in shares and debt in November, pushing the currency lower. The rupee hit a more than two-year low against the dollar on Friday.

Still, with expectations that a goods and services tax and land acquisition bills will be passed into law, analyst see a fillip to the economy and stocks over the coming year.

A Fed rate hike would also reduce market uncertainty after investors agonized over US monetary policy all year.

"Our markets (Indian shares) should start doing better from next year, with impact on the economy by the measures taken by the government and a clear trajectory from the Fed," said Neeraj Dewan, director at Quantum Securities Private Limited.

Reserve Bank of India Governor Raghuram Rajan said on Friday the central bank was ready for "any eventuality" from the Fed meeting this week.

India's stock market has generally outperformed other emerging markets over the past two years.

Economic growth in Asia's third largest economy picked up in July-September, outpacing China on improving domestic demand and manufacturing activity.

This acceleration helped persuade the RBI to keep rates unchanged last month after it had lowered the repo rate by 125 basis points this year, including a larger-than-expected 50 basis point cut in September.