The year 2005 commenced with the bell-weather BSE Sensex at an all-time high of 6626 and most market analysts predicted that the Bull Run which had continued unabated for 18 months was on its last leg.

Too often in the past, the BSE Sensex had flattered only to deceive and with crude oil prices beginning to rise ominously, the writing appeared to be on the wall. Confounding most market-watchers, the BSE Sensex continued its ascent and scaled new highs.

The positive rub-off of the Union Budget exempting long term capital-gains tax on shares, good monsoon and continued thrust on infrastructure projects were also positive.

Amid this, the foreign institutional investors also begun to position India as an alternative investment destination to China resulting in an unprecedented inflow of foreign funds.

Mega-public issues like Jet Airways [Get Quote] and ICICI Bank [Get Quote] also brought in huge foreign money although it is the medium-sized new issues that gave extraordinary returns post-listing.

How will 2006 pan out? With Japanese and Korean FIIs being the latest converts into the Indian market, chances of a 360-degree reversal appear bleak. At the same time, it would be unrealistic to expect the markets to continue to steam ahead at the same pace.

The potential party-pooper that raised its head, albeit in a hitherto benign manner, remains rising crude oil prices. The chances of recoil with a lethal backlash cannot be entirely ruled out.

After all, all good times and things have to send at some point in time. Yet, the estimates in the table below suggest that the party may still last some while, although it must be mentioned that these estimates are based on a set of assumptions, that are unverifiable, for now.

Another asset class to watch out for in India is real estate. With rapid all-round development and huge foreign funds likely to flow in this direction in the year ahead, it could well be the asset class that performs best in India in 2006.

To conclude, there is a lot happening in India, which is fast emerging as a market that international investors cannot afford not to have exposure to in their portfolios.

The proverbial million-dollar question that arises though is -- how well can the government manage the growth of the Indian economy.

A big plus to start with is India's erudite prime minister and market-savvy finance minister combination, which if left undisturbed by political turbulences, could well be the ones to push the Indian economy into an even faster growth trajectory.

Ashok Kumar heads Lotus Wealth in Mumbai.