The study, titled `an analysis into the capital market boom,' says that as against the average p/e ratio of Indian stocks of 16.6, the competing ratio in countries like China is 25.8, South Korea 25.3, Indonesia 23.1 and Malaysia 19.8.

Ficci's analysis reveals that the p/e ratio in India has the potential for reaching around 25, a gain of about 50 per cent from the current levels.

The reason for a higher p/e ratio for Indian stocks is the focus of FIIs due to low inflation rate which is unlikely to depreciate the rupee along with higher earnings expecations, an increased export growth and better indirect tax realisation, the study said.

Ficci conducted the analysis on the basis of 42 stocks which witnessed intensive buying in thecurrent rally helping the BSE Sensex cross the 4,000 mark.

The current boom in the capital markets seems to be a sustained one and the Sensex will rule at over 4,000 points in the coming months, a chamber statement said.

The Ficci study said that India's economic recovery has coincided with a period when investment opportunities in other emerging markets are limited."Indian companies with low p/e ratio and strong fundamentals are expected to gain from FII investment," it said. The chamber said that despite political uncertainty, the Indian economy is expected to achieve a growth rate of around 6 per cent and the fall of the BJP Government gave the FIIs an opportune time buy Indian stocks.

The study further said that the current boom in the capital market is here to stay at least in the medium term (till the next mid-term elections) as UTI had been looking for booking profits ahead of their annual closing and is expected to be back from July onwards.