Analysts at global brokerage house Morgan Stanley have said this in their outlook for the Indian stock market. He has expressed hope that the Sensex can reach this level in bullish conditions. The brokerage house had earlier predicted that the Sensex would touch the 1,00,000 level by June 2026 in a bullish scenario and gave a 30 percent chance of this.
According to Morgan Stanley, 2025 is projected to be India's weakest year for emerging markets since 1994. Relative valuations have improved significantly and are likely to bottom out in October 2025, they believe.
In a recent report, analysts have written that India may turn to positive growth in the coming months and there is a possibility of a re-rating in the market. Their base-case estimates the Sensex to reach 95,000 by December 2026, with a probability of 50 percent.
Macro stability is the key to a rise to 95,000, Morgan Stanley expects. These include fiscal consolidation, increased private investment and positive differentials between real growth and real interest rates. Strong domestic growth, steady global growth and soft crude oil prices are also part of its assumptions.
Ridham Desai, Managing Director and Chief India Equity Strategist at Morgan Stanley said in a report, "Our base case is expected to resolve the India-US tariff dispute in the coming weeks. We consider a 25 basis point (bps) interest rate cut and improved liquidity as the base case for monetary policy in the short term." He further added that, "Demand for retail investors is outstripping supply. Sensex earnings are projected to grow at 17% per annum till FY 2027-28."
On the other hand, if crude oil prices rise above $100 per barrel, the situation could worsen. RBI may have to adopt a tighter policy to maintain macro stability. If global growth slows and the US goes into recession, the market will be significantly affected. According to Ridham Desai, in such a scenario, the Sensex could fall to 76,000 by December 2026. The probability of this is about 20 percent.
If India-US trade relations deteriorate, market pressure may increase. Sensex's earnings growth may be limited to 15% during FY2025-28. Growth may weaken further in FY 2025-26 in particular. Equity valuations may also decline if macroeconomic conditions worsen. All these factors can bring the market down by around 10%. In such a scenario, the Sensex may even touch 76,000 by December 2026.
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