After seeing a 5% decline in 2015, the benchmark BSE Sensex index is forecast to hit 35,000 this year, gaining 30% compared to its closing level of 26,117.54 on 31 December 2015, according to analysts.

A majority of brokerage firms also expect the 50-share Nifty index to rise 38% to touch a peak of 11,000 by December 2016, according to a poll conducted by Team ETMarkets.

The rally in the indices would come from a recovery in corporate earnings growth, reforms and inflows from overseas investors, the brokerages said.

However, 2015 saw the Sensex reach an all-time high of 30,024 points in March, driven by positive expectations over the NDA-led government's first full year Budget and rate cut announced by the Reserve Bank of India (RBI).

Sensex also witnessed its worst one-day loss on 24 August, 2015, after Chinese authorities surprised global markets with a steep devaluation of the country's currency. The equity index dropped 1,624.51 points, or 5.94%, that day.

The Sensex had gained nearly 30% in 2014 when investors' optimism on the Narendra Modi government was at its peak.

Most of the participants in the poll said they are "betting" on higher economic growth and passing of key reforms to lead to a rally in the markets in calendar 2016.

"The earnings growth would be a major trigger for the market, led by declining interest rates, low commodity prices and government reforms," The Economic Times quoted Vaibhav Agrawal, VP & Head of Research at Angel Broking, as saying.

Analysts expect consolidation in the markets to continue for at least in the first half of 2016 but it could form "the base for bull run" to extend.

"If the domestic economic scenario improves further and corporate earnings gain momentum aided by an easing monetary cycle and reforms push by the Modi government, the Sensex may rise about 15-20%," said Amar Ambani, Head of Research, IIFL.

"The year 2016 could very well be a defining year for the next big bull run. Even though the global economic situation remains uncertain, India is very likely to enter a conducive economic pedestal, which would take the market to new heights," he said.

Largecap stocks, which were the major losers last year, still present good buying opportunities along with some quality smallcap and midcap stocks, analysts said.

"The global economic situation has improved as uncertainty over to Fed rate hike is over. On the domestic front, the government has not been able to carry out reforms like GST due to lack of majority in the Upper House," said Vijay Singhania, Founder Director, Trade Smart Online.

"The index may not move very aggressively. Considering all this, the Sensex may hit a record high of 31,000-32,000 after the Budget. We see the 31,000-32,000 range for the Sensex in 2016," he said.