The Aryavarth Express New Delhi, April 9: Indian equity markets could be poised for a strong upward move, driven by improving macroeconomic conditions, earnings growth, and supportive policy measures, according to a report by Morgan Stanley.
In its latest India Equity Strategy Playbook, the firm said that factors such as recent underperformance, attractive valuations, investor positioning, and strengthening earnings trends indicate a potential recovery in the coming months. It noted that the market “appears set up for a big move” following a phase of subdued returns.
Morgan Stanley has set a target of 95,000 for the BSE Sensex by December 2026, suggesting a potential upside of around 22 per cent from current levels. The projection reflects growing confidence in India’s medium-term growth trajectory and a stable policy environment.
The report also outlined alternative scenarios. In a bullish case, if crude oil prices fall below USD 70 per barrel, the Sensex could climb to 1,07,000. Conversely, in a bearish scenario where crude prices hover around USD 100, the index may decline to approximately 76,000.
The base case assumes continued macroeconomic stability, increasing private sector investment, and steady global growth. Under this scenario, Sensex earnings are expected to grow at an annual rate of about 17 per cent through FY28.
Morgan Stanley highlighted that Indian equities are currently trading at historically attractive valuations, with relative pricing near past lows. It also pointed out that India’s share in global corporate profits exceeds its weight in global indices by the widest margin on record, signalling strong structural earnings potential.
The report suggested that the earnings cycle in India is regaining momentum, supported by recent economic indicators, despite some short-term disruptions caused by geopolitical tensions.
However, it cautioned about potential risks, including a slowdown in global growth and escalating geopolitical uncertainties. Supply-side disruptions from conflicts could also impact sectors such as energy and fertilisers in the near term.
From a sectoral perspective, the firm favours domestic cyclical stocks over defensives, maintaining an overweight stance on financials, consumer discretionary, and industrials, while remaining underweight on energy, materials, and healthcare.
Overall, the report presents a positive outlook for Indian markets, supported by strong domestic demand, policy continuity, and improving earnings visibility, even as global risks remain a key concern.
