* India's BSE Sensex set to rebound 12 percent by year end
* FII inflows not seen as robust as 2010
By Ami Shah
MUMBAI, March 24 (Reuters) - India's benchmark stock index should recoup recent losses but will still end 2011 where it began, as inflation concerns could yet dampen investor appetite in an otherwise fast-growing economy, a Reuters poll found.
The main 30-share BSE Sensex index has been by far the worst performer among the 18 major stock exchanges covered by the latest Reuters poll so far this year, having lost more than 10 percent of its value from the 2010 close.
While it should rise just 1 percent by the end of June from Thursday's close of 18,350 and 12 percent by the end of 2011, it looks set to finish the year without significant gains, according to the median response of 26 market participants from a poll taken over the past week.
If the index does break even this year as analysts expect, that would still be the least impressive performance compared with forecasts for all the other indexes.
The poll of investment banks and brokerage firms, taken over the past week, sees the main index at 18,550 at end-June and at 20,500 at the end of the year -- not far from 2010's 20,509 close.
"Earnings growth and economic growth should help Indian markets rise higher until the year end," said Deven Choksey, managing director and chief executive of KR Choksey Shares.
The estimates from a similar poll conducted three months ago were more optimistic and those forecast the Sensex to rise to 22,000 by mid-2011 and 23,350 by year-end.
Choksey expects 18 percent earnings growth for Sensex-30 companies for the fiscal year ending March 2012, and said that inflation pressures may ease gradually in the second half of the year.
The Sensex rose 17.4 percent in 2010, on the back of record foreign fund inflows of $29.3 billion, but Indian equities may not see as robust inflows this year as issues like sticky inflation divert investors towards developed economies.
Eight interest rate hikes since last March have failed to dampen inflation that topped expectations at 8.3 percent in February and in the year to date foreign funds pulled out around $1.8 billion from Indian equities, helping to send the benchmark index almost 11 percent lower.
Fourteen of 16 respondents who answered an extra question in the poll did not expect foreign institutional investor (FII) inflows to be as robust in 2011 as last year but said there would be a upturn after June.
"At this point, inflows are dependent on geo-political events. FII inflows will take momentum after June-July due to present international disturbance and global uncertainties like Libya. Stable inflow will come only after June," said Madhumita Ghosh, head of equity research at Unicon Financial.
Even after the recent correction, Indian equities trade at a premium to their BRIC peers.
The Sensex trades at 14.3 times one-year forward earnings, while China's Shanghai Composite Index trades at 13.1 times. Brazil's Bovespa and Russia's RTS Index trade at 10.5 times and 6.9 times one-year forward earnings respectively.
"If the optimism regarding the pick-up in developed world economies continues to rise, emerging markets may be a bit neglected by investors," said R. K. Gupta, managing director of Taurus Mutual Fund.
(Polling by the Bangalore Polling Unit; Additional reporting by Sumanta Dey; Editing by Jon Loades-Carter)