Analysts at Morgan Stanley expect the Sensex to hit the 105,000 mark by December 2025 as their bull-case scenario for the index.
Notably, this translates into a rise of nearly 41 per cent from the current levels.
They said the risk-reward for the Indian markets is turning favourable, and they see the Sensex at 93,000 levels by December 2025 – up around 25 per cent from the current levels as their base case.
In a bear-case scenario, they expect the Sensex to slide nearly 6 per cent to 70,000 levels by December 2025.
Ridham Desai, head of India research and India equity strategist at Morgan Stanley, has given insights in a recent co-authored report with Upasana Chachra, Sheela Rathi, Nayant Parekh and Bani Gambhir, that Indian equity markets appear oversold and a stock pickers’ market now seems to be unfolding.
According to Morgan Stanley, for the markets to stage a recovery, global factors, including US policy and global growth rates, will be crucial.
Morgan Stanley noted that India will be the world’s most sought-after consumer market and will undergo a major energy transition; credit to gross domestic product (GDP) will rise, and manufacturing could gain share in GDP.
“The market has ignored the RBI’s policy pivot and a strong budget from the government, among other positive developments since early February. India’s low beta characteristic makes it an ideal market for the uncertain macro environment that equities are dealing with. Importantly, our sentiment indicator is in strong buy territory,” Desai wrote.
Morgan Stanley believed that going forward, consumption recovery is expected to get broad-based as the income tax cuts propel urban demand to support the buoyant trend in rural consumption levels.
Within investments, they see public and household CapEx driving growth, while private corporate CapEx recovers gradually. It expects inflation to be around 4.3 per cent YoY in FY27.