Can the sensex see 16000 again?

I saw the commentary by Mr. Mukherjee of Ambit Capital - his prediction is that Sensex could touch 16000 by end of June. Very interesting.. he is of the view that the current climb is on the heels of FII inflows with no change in fundamentals. Clearly the DII's are not buying. So is this sustainable or we slated for another correction? I will draw you two scenario's -

Firstly the bear sceario that Mr. Mukherjee paints - the FII inflows could stop if Bernanke turns off the liquidity tap. Bernake could do that if inflation fears are real - the unemployment rate is falling and their is an increase in real wages. Clearly, that does not seem to be the case. More likely, the sensex could see 16000 if Indian companies disappoint on earnings due to margin pressures (increase in input costs and increase in wages). The FII's in that scenario are likely to see India as a more risky asset class in comparison to the US where economic recovery seems to have real legs and hence move money out of India.
However, there is a 50 percent probability that companies might just deliver and more money could flow in.

So in the extreme bull scenario - the FII's continue to pour money due to better than expected company results, morever the Indian policy makers shift gears after the state elections and actually make investments in the last year of the five year plan - infra sector which has been the lagard until now starts performing and the gdp grows due to investment spending.


I will let you decide, which scenario is the most likely?