STATESMAN NEWS SERVICE
Mumbai, 25 October 
Global brokerage Deutsche Bank, in its report “India equity strategy”, sees the S&P Bombay Stock Exchange Sensitive Index at 22,000 points by December 2013, revising its earlier target of 21,000 points. 
The reasons adduced are “investors pessimism earlier this year is receding amid positive development like good monsoon” and recent rallies in bank and metal shares triggered by the return of foreign funds with huge dollar liquidity. 
The previous record high achieved by the 30-stock BSE benchmark was 21,206.77 points on 10 January 2008.
There is specific mention of steady increase in global liquidity and signs of easing macro concerns ahead of Tuesday’s Reserve Bank of India’s half-yearly review of credit and economic policy to be released by the Governor Mr Raghuram Rajan. 
Deutsche Bank expects relaxed liquidity tightening measures. This, market analysts say, is reflected in the opinion poll conducted this week, which suggests the RBI would increase repo rate by 25 basis point, leave CRR untouched and would further cut marginal standing facility or MSF for banks to 8.5 per cent from 9 per cent which would release more liquidity in the system. 
In its model portfolio, Deutsche Bank names banks as “overweight”, but cut IT segment ~ despite robust Q2 numbers from Infosys Technologies and TCS ~ to “neutral.”
Other positive factors that favour bull momentum picking up is “bottoming out of the economy, a synchronised global growth recovery and the United States Federal Reserve’s decision to defer tapering of its asset buying programme.” 
The currency and stock market analysts say they do not expect the tapering until next year, which means foreign funds would continue to invest more in domestic equities. 
With four trading sessions remaining in October, the provisional data suggest foreign founds have bought equities worth $3.9 billion since 4 September, when the new Governor took charge at the central bank. 
The only negative factor that may hit the stock rally is Indian economy has not displayed signs of genuine recovery. 
Dalal Street analysts say the Deutsche Bank report may hold good for next few more weeks. But the rally cannot be sustained unless the domestic macro concerns are convincingly addressed. 
They point out how the foreign funds hammered stocks in May on reports about the US Fed withdrawing economic stimulus gradually. Foreign funds withdrew heavily sending stock indices as well as the rupee hurtling down. That fall could not be stemmed since domestic macro fundamentals were not strong enough to withstand the hammering, analyst say.
Another reason, why the RBI may tone down its tight monetary stance, is the success of its measure to allow state-run banks to borrow cheap dollars abroad, analysts say. 
The Reserve Bank of India, a few days ago, claimed it had netted $10.1 billion on account of a spurt in foreign exchange deposits received by domestic lenders.
This is also reflected in current foreign exchange reserves of $280 billion as against $275 billion in August.