The BSE Sensex is poised to touch the 19000-mark in 2010 fuelled by global equities' rising growth premium, favourable demographics, diminished policy risks and inexpensive valuations of Indian stocks.

Prabhudas Lilladher, a leading equity research and brokerage firm for foreign institutional investors, said in its 'India Equity Strategy' report that Indian equities were on a long-term bull phase.

It said the Indian equity market was amongst the few markets around the world, which was poised to advance on a long-term bull phase over the next several years.

Besides the Sensex, the PL research report said the NSE Nifty would touch 5600 next year.

The report said one of the most important factors behind the bullish outlook was the huge proportion of Indian youth which had placed the country in a favourable demographic position vis-a-vis other countries.

This would result in a strong earnings growth outlook, the report said.

The real GDP growth would be in the vicinity of six to eight per cent over the next five years, with the prospective nominal GDP growth around 10 per cent, according to PL research estimates.

The PL research GDP growth forecast was based on the considerations that the average growth rate of labour force would be high, a strong potential for financial deepening, lower inflation and increased infrastructure spending.

The report, however, said the Indian market was not without risks.

It said the most notable risk was of policy slippages or policy mistakes.

The other risk factors, included uncontrolled rise in public debt, corruption, geopolitical tensions on the Indian sub-continent and water shortages.

Going forward, the PL research said real interest rates were expected to remain at modest levels on account of capital flows outlook, both FII and foreign direct investment, into the country.

The favoured long-term sectors, according to PL were those of infrastructure, media, retail, financial services and education.