Does anyone suspect a bubble in the stock market? I have friends
and family in India who think there is good reason for current
stock market frenzy. But the same was true here in the US during
all its bubbles, as well as everywhere else in the world for
any bubble starting with the tulip mania in Holland back in the day.
The Indian economy has been doing good and the prospects are good
too, but I dont think an 8 percent GDP growth should result in
150% returns on stocks in less than a year. I don't believe Indian
companies are growing trees as yet.

Good point. The Indian stock markets are heated but not over heated though. Not all stocks have doubled. India is seeing major investments in areas of infrastructure, transportation, banking and consumer products and eventually real estate. The tech sector is overheated but there are good buying opportunities in the traditional sectors - this is where money can be made.

Currently, the Sensex is at 9,300. The psychological barrier will be whether and when it cross 10,000. That, in my opinion would happen before / around the next budget session mid-March. I believe that 13,000 will be the tipping point for the Sensex after which it would be better to come out of the market and invest in bonds.

I am waiting on the irrational exuberence to end and the irrational
pessimism to begin so that I could buy into the longer term growth
in the BSE.

Throughout the history of the stock markets, markets rarely move 10-12% a year regularly. They typically make 30%+ gains and then stay on course with a 10% gain. If you can catch the <10% cycle and sell after a couple of 30%/year cycles you can beat the market.


BTW, does anyone know of any index funds/ETFs that buy
into the broader Indian stock market for foreigners/NRIs?

Here are some ETFs that invest in India.

IFN - India Fund
IIF - Morgan Stanly India Fund
ETGIX - Eaton Vance Greater India A
EMGIX - Eaton Vance Greater India B