Eight-year cycle: Sensex may hit 21,000 jackpot in 2011

Yes, this is the headline in Economic Times.

Here is a excerpt from the article-
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Follow 20-20 rule for better returns right. The Indian stock market is in the midst of a consolidation phase that will set the tone for the next bull run which, according to chartists, is set to begin in the first half of 2011.

The technical analysis, based on a classical eight-year time cycle that the market has followed since 1984, projects the Bombay Stock Exchange (BSE) benchmark Sensex to break the 21,000 barrier by early 2011 and embark on a bigger bull run. “The current rally is an upward leg of the larger consolidation pattern,” said Anup Bagchi of ICICI Securities. “In 2010, the Sensex will fluctuate in the range of 12,500 and 21,000. The next major peak is expected in 2016.”
Source: EconomicTimes

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21,000 seems like a quite bullish prediction to me. The question is that will the RBI let the FII inflow increase? There are two opposing forces driving RBIs decision making right now
1. Growth- In the past the RBI has been conservative in dealing with FII money. The sensex doubled in the last few months and now the RBI has become cautious. That is why it left the interest rates untouched last year
2. Inflation -Inflation is in double digits and increasing. Soon, RBI will have to mop up excess liquidity from the system.

Achieving the both the above mentioned objectives may not be possible.

Net-net, I think the RBI will try to tackle inflation first.