Sensex to breach 100000 mark? Morgan Stanley signals strong upside in new report

Sensex Target for 2025: Indian equities are expected to see a firm recovery over the next year. This view comes from a new Morgan Stanley report released on Tuesday. The brokerage said the policy shift by the government and improving economic conditions will support the market.

Morgan Stanley believes the worst phase of the mid-cycle slowdown is now over. It expects earnings growth to improve in the coming months. The report added that India’s long-term growth story is becoming stronger due to recent policy actions.

According to the brokerage, most risks for the market come from outside India. Domestic fundamentals remain stable. It also said that 2026 may turn into a “macro trade” year. This will be a shift from the stock-picking environment that dominated 2025.

The report highlighted that favourable policies are improving expectations for nominal growth. This is expected to support corporate earnings. It added that India’s relative valuations now look supportive. Foreign portfolio investors currently have their lowest exposure to India in history, which also leaves room for fresh inflows.

Domestic investors continue to participate actively. The brokerage said this will help Indian equities deliver strong returns. It also noted that Indian markets are set to reverse their weakest relative performance against emerging markets in 30 years.

Sensex to breach 100000 mark?

Indian equities may see a sharp rise over the next two years. Global brokerage Morgan Stanley has forecast a 13 per cent upside in the BSE Sensex by December 2026 in its base-case outlook. The brokerage has also set a bull-case target of 107,000 for the index by the same period.

The report said the outlook is based on expectations of macro stability. It added that the recovery will be supported by fiscal consolidation, higher private investment, stable domestic demand, steady global conditions, and favourable oil prices.

On Tuesday, the Sensex closed at 84,673.02.

Morgan Stanley also noted that India-US tariff issues may be resolved soon, which could improve trade sentiment. The brokerage’s base-case view assumes a 25-basis-point cut in short-term interest rates and a liquidity-friendly policy stance.

It expects a 17 per cent compound annual growth rate in Sensex earnings through FY28, indicating strong corporate earnings momentum in the medium term.

However, it warned that a global slowdown is the biggest risk. India may still outperform in a global selloff due to its low market beta. But such a situation would limit absolute gains for investors.

Concerns about increased share issuance, weak trailing returns, high valuations, growth uncertainties and slower progress in the AI space were termed as largely misplaced.

On portfolio strategy, Morgan Stanley said domestic cyclical sectors will likely outperform defensive and external-facing sectors. It recommended overweight positions in financials, consumer discretionary and industrials. It advised underweight exposure to energy, materials, utilities and healthcare.

(With IANS inputs)