In recent weeks, he's almost never lost money because, as he puts it, "the goras are driving up the market". The "goras" Shah is referring to are, of course, the foreign institutional investors, which have invested over $8 billion in Indian stocks so far this calendar year.

But whether Shah will continue to skim the cream off a buoyant market depends on answers to several questions: Are the FIIs the only ones partying? Is the rally really sustainable from this point? Will the party continue if some FIIs change their minds and start selling to lock in some profits? If market mavens are to be believed, the answers to the three questions are yes, yes, maybe.

Says Devesh Kumar, head of equities at merchant bank ICICI Securities: "The rally has been driven largely by FII buying in the domestic market. Local day traders are only riding the rally." Domestic equity funds have been too busy managing redemption pressures to make much of a contribution to the boom.

As Venkatesh S, head of research at JP Morgan India, observes: "Mutual fund monthly inflows (into equity) have been positive for only three months so far in 2004; they have been negative since June. The year-to-date outflows have been around $ 268 million. So, the current rally has mostly been fuelled by FIIs while domestic funds have faced redemption pressures."

Not everybody thinks the mutual funds are bit players, but there is no dissent whatsoever about the primacy of the FIIs. Ajay Bagga, CEO of Kotak Mutual Fund, estimates that the FIIs account for Rs 2,300-2,500 crore (Rs 23-25 billion) out of daily trading volumes of around Rs 7,500-8,500 crore (Rs 75-85 billion).

"That's 25-30 per cent of the total. (On the other hand), the mutual funds are grossing volumes of Rs 600-900 crore (Rs 6-9 billion) daily. The FIIs command a big share of this institution-driven market," says Bagga.

Market aggregates underline the same point. FII turnover (buy plus sell orders) accounted for nearly one-fifth of the total trading on the National Stock Exchange and Bombay Stock Exchange cash market in this calendar year up to November.

Given this predominance, the key worry is: can a shift in FII mood spook the markets? The betting currently is that the India story is still too strong for FIIs to turn their backs on it.

Says Nikhil Johri, COO of ABN Amro Mutual Fund: "We believe that this rally is sustainable because equity valuations are not stretched at this point in time. The Indian market is trading at the same level it was close to 10 months back while it has discounted three more quarters of strong earnings."

Adds Nishid Shah, CIO (equity) at Birla Sun Life Mutual Fund: "There is a general tendency to draw conclusions about the market's overvaluation just by looking at absolute numbers of the Sensex or Nifty. But the fact is market valuations continue to remain attractive at 12-13 times estimated earnings in fiscal 2006 (the next financial year)."

But Morgan Stanley strikes a bearish note in the general chorus of optimism. In a recent note to its customers last week, the global investment bank warns that Indian stocks are already priced 20 per cent over fair value.

Says the note, issued last week: "The market looks vulnerable on fundamentals (macro, earnings, and valuations) but is supported by strong liquidity driven by a weakening US dollar."

Morgan Stanley considers the rupee-dollar rate to be the key determinant of continuing portfolio inflows in the country. "The strength of the rupee versus the dollar will determine the inflow in the market."

The investment bank counts the threat of inflation also as a big worry that could spoil the party. "An associated factor is the rate of inflation given its potential dampening impact on growth," the note said.

Morgan Stanley also said the country's overall capacity utilisation rate seems to be running quite high, especially in infrastructure, and hence a recovery in capital expenditure is essential for sustaining medium growth.

But the bulls are still in an overwhelming majority. They offer two reasons the FIIs are unlikely to rock the boat. One is the growth in the number of new FIIs.

Between January 2004, when the Sensex crossed 6000, and September, when it renewed its climb back past 6000, the number of FIIs registered in India went up from 527 to 608.

Says U R Rao, divisional manager of Canbank Mutual Fund: "Many new FIIs are getting registered with Sebi because India is considered one of the finest investment destinations."

The other reason few people believe the rally will not collapse is the domestic investor. Says Amit Rathi, managing director of broking house Anand Rathi Securities, "We believe the rally has a lot of steam left - at least in the immediate term - (precisely) because local investors have exited. "With every consolidation or rise in the market, these investors will be forced to bring money back into the markets (given the lack of opportunities elsewhere), giving the markets another push ahead. Also, Budget expectations will keep sentiments buoyed. "With the budget still more than two months away, day-traders such as Bhupendra Shah may be justified in counting their chickens even before they are hatched in the new year.