Mumbai, Dec. 30: The sensex ended triumphant on the last day of trading in 2005 by cresting to a new closing peak at 9397.93, just a tad shy of its highest intra-day level of 9442.98 that it touched on December 23.

It’s been a relentless 12-month ride to the summit. Starting robust at 6679.20 at the end of the first day of trading on January 3, it has surged 40.7 per cent to the very last day of trading ? making India arguably one of the best rides for overseas investors among the world’s emerging markets.

That underscored the reason why foreign institutional investors (FIIs) funnelled an unprecedented $10.6 billion into the Indian stock markets in 2005.

Robust corporate earnings projected in the third quarter and the buoyant Indian economy that continues to grow at a pacy 7 per cent are expected to ensure that foreign investors keep coming in droves in 2006.

Extending gains to second straight day, the 30-share BSE sensex opened higher at 9,339.32 and breached the 9400 mark during intra-day trades to touch the day’s high of 9,427.23 before ending the day at 9,397.93, a net rise of 74.68 points over the last close of 9,323.25. The Sensex gains means that the index has ended 2005 as Asia’s second best performing index after South Korea’s KOSPI, which has risen 54 per cent. It has even overtaken Japan’s Nikkei that gained around 40 per cent. Despite the bullish sentiment prevailing, market analysts are circumspect on where the key index will go from here on. While attainment of the 10,000-mark is considered inevitable, many are not willing to stick their necks out by predicting when that might happen.

Experts here state that there are two critical factors that will determine the course of markets come 2006. “It will greatly depend on how the third quarter earnings season goes and the last three months of this fiscal. Between these two is the all-important Union Budget for 2006-07,” says Amish Choksi, vice president, institutional equities at Edelweiss Capital.

Choksi, who expects FII inflows to start picking up from April, adds that till these two events unfold, the key investors are likely to adopt a wait-and-watch approach. Another critical factor that could influence foreign money coming into India is the state of other economies. Though India is now one of the best performing economies in the world, the Japanese economy is showing healthy signs after a slowdown for a decade.