Author: Aditya Pareek | EQMint | Market News
Mumbai, November 4, 2025 – Global investment bank Morgan Stanley has projected a bullish outlook for India’s equity markets, predicting that the BSE Sensex could hit the 100,000 mark by June 2026, signaling the end of the recent market correction phase.
According to the firm’s latest report, the factors that led to India’s underperformance against other emerging markets (EMs) in recent months are now reversing, paving the way for a renewed rally driven by macroeconomic recovery and policy support.
Market Correction Over, Rally Ahead
Morgan Stanley’s analysts, led by Ridham Desai, Managing Director and Chief India Equity Strategist, and co-author Nayant Parekh, believe the Indian equity market has entered a new phase of acceleration, supported by both fiscal and monetary policies.
The firm’s bull-case scenario, which it assigns a 30 percent probability, pegs the Sensex at 100,000 levels by June 2026 — representing nearly 20 percent upside from current levels.
In its base-case scenario (50 percent probability), Morgan Stanley expects the Sensex to reach 89,000, up around 6.6 percent from current levels. The bear-case scenario (20 percent probability) places the index at 70,000, implying a 16 percent downside.
“The correction is over. India’s growth cycle is set to accelerate, driven by reflation efforts, policy tailwinds, and improving macro fundamentals,” the report noted.
Macro Tailwinds Driving Growth
The report highlights that India is transitioning into a market driven by macroeconomic factors rather than stock-specific stories, signaling a shift in investor strategy from short-term trading to structural positioning.
Morgan Stanley pointed out that the acceleration in India’s growth is underpinned by the Reserve Bank of India (RBI) and the government’s policy actions, including:
- Rate cuts and CRR reduction to boost liquidity.
- Banking deregulation to enhance credit flow.
- Front-loaded capital expenditure (capex) initiatives.
- A ₹1.5 trillion cut in GST rates, improving consumption sentiment.
The report also cited improving diplomatic ties with China, a potential India–US trade deal, and falling inflation volatility as catalysts that will further fuel investor optimism.
“A likely India-US trade deal should further boost sentiment. Relative valuations have corrected and likely made a trough in October,” Morgan Stanley’s strategists wrote.
Falling Oil Dependency and Rising Export Share
Morgan Stanley emphasized that India’s macro resilience is improving due to structural shifts in its economy. The declining intensity of oil in India’s gross domestic product (GDP), coupled with the rising share of exports — particularly services — in GDP, is helping reduce the country’s savings imbalance.
This, the report said, would lead to lower structural interest rates over time, while consistent fiscal consolidation will enhance India’s macro stability.
“High growth with low volatility and falling interest rates equals higher valuations. This environment supports the shift of household balance sheets towards equity,” Morgan Stanley said.
The firm expects lower volatility in inflation and interest rates, driven by better supply-side policies and a more proactive fiscal stance, making India one of the most attractive long-term investment destinations among major economies.
Top Stock Picks: 10 Overweight Bets
Morgan Stanley maintained an overweight position on 10 key Indian stocks that it believes will outperform in the upcoming bull cycle. These include:
- Maruti Suzuki
- Trent Ltd
- Titan Company
- Varun Beverages
- Reliance Industries (RIL)
- Bajaj Finance
- ICICI Bank
- Larsen & Toubro (L&T)
- UltraTech Cement
- Coforge
These stocks span across automotive, consumer, financials, infrastructure, and technology sectors, reflecting the broad-based nature of the recovery Morgan Stanley anticipates.
“Stock picking will take a backseat as macro factors dominate market performance,” the report observed, suggesting that investors should align with the India growth narrative rather than short-term sector rotations.
Why Morgan Stanley Is Optimistic
The brokerage attributes its bullish stance to a combination of policy-driven reflation, improving corporate earnings, and strong domestic participation. It expects positive earnings revisions in the coming quarters, alongside RBI rate cuts, public sector privatization, and lower US tariffs on India — all of which will act as key catalysts for the next market upcycle.
Additionally, foreign portfolio investor (FPI) positioning remains near multi-year lows, leaving ample room for re-entry once global risk appetite improves.
“Net FPI buying will need growth to recover and/or bull markets elsewhere to fade, plus a rise in corporate issuances,” the report said.
Risks to the Outlook
While optimistic, Morgan Stanley flagged a few downside risks that could derail its projections. These include:
- Slowing global growth, especially in the US and Europe.
- Worsening geopolitical tensions that could impact capital flows.
- Rising commodity prices, particularly crude oil, that could strain India’s import bill.
- Delay in domestic reforms or unexpected fiscal slippages.
However, the report emphasized that India’s structural fundamentals — strong domestic demand, corporate deleveraging, and resilient banking sector — provide significant downside protection.
A New Market Phase: From Correction to Expansion
Morgan Stanley’s bullish projection comes amid a phase where Indian equities have stabilized after months of FII selling and valuation correction. The brokerage believes the market has now entered the early stages of a structural bull run, supported by a more predictable policy environment and macro stability.
“India’s hawkish macro set-up post-COVID is now unwinding. The growth cycle is accelerating, inflation volatility is declining, and valuations are normalizing,” Ridham Desai said.
He added that India’s long-term investment story remains intact, fueled by domestic liquidity, rising retail participation, and institutional confidence.
Outlook: 2026 — The Year of the Indian Market
As the Indian economy strengthens on the back of rate cuts, policy reforms, and capex revival, Morgan Stanley’s forecast underscores the market’s resilience and potential for re-rating.
Should its bull-case scenario play out, India’s equity market could witness one of its strongest rallies in history — with the Sensex touching the 100,000 mark by June 2026, marking a new era for Indian investors.
“India is poised to lead global emerging markets with high growth, low volatility, and strong structural reforms,” the report concluded.
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Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.
