Morgan Stanley's big speculation about India: Sensex could touch 95,000 by Dec 26 - Punjabi News

Published on: 19 Nov 2025 at 01:17 PM

Morgan Stanley’s big speculation about India: Sensex could touch 95,000 by Dec 26

Published by: Fact News

Fact News Service Chandigarh, November 19: As the countdown to a new year begins, Morgan Stanley is upbeat about the prospects for Indian markets in 2026. They expect a strong bounce in Indian stocks over the next 12 months. According to Morgan Stanley, there is a 50% probability of the Senex scaling to 95,000 by December 2026 if the ongoing policy shift gathers pace. Morgan Stanley India’s Managing Director and Equity Strategist, Ridham Desai’s 2026 India outlook indicates that, “the long-term story is gaining strength with government policy action – cyclical recovery is backed by policy pivot. Most risks to our views come from outside India.”

According to Morgan Stanley, “policy has pivoted, supporting a strong recovery in nominal growth, which should take earnings growth out of the mid-cycle slowdown experienced over the past 12 months,” in the Indian perspective. Ridhan Desai, in this report, highlighted that “relative valuations are consistent with improved forward performance. FPI exposure remains the lightest in history. The structural domestic bid is intact. India’s long-term story has been reinforced with a slew of reforms. Thus, Indian equities appear set to reverse their worst performance relative to EM in 31 calendar years.”

The brokerage projects Sensex earnings to grow at 17% a year through FY28. It expects nominal GDP growth to average 10% to 11% over the next five years. It said trend earnings are still trailing nominal GDP, leaving room for a catch-up. This is the earnings leg it believes will pull the index toward the target.

The implied trailing P/E at 95,000 is about 23.5 times, slightly above the long-term average of 22 times. Morgan Stanley expects this to be reasonable if inflation stays steady and policy remains consistent.

Morgan Stanley on India: 30% probability of Sensex at 1,07,000 by December 2026

If conditions turn more favourable, they see 30% probability of the bull case playing out. In this case, they have a Sensex target of 1,07,000. It assumes oil below $65, a calmer global trade environment, and stronger results from reflationary policies. Under this outcome, the firm expects earnings to grow at nearly 19% a year between FY25 and FY28.

Morgan Stanley on India: 20% probability of Sensex at 76,000 by December 2026

They also have a bear case projection – Morgan Stanley sees a 20% probability of Sensex at 76,000. This, they believe, can play out if the crude spikes above $100 and there is a forced policy tightening by the RBI along with a deeper global slowdown and a US recession. The brokerage expects earnings to grow at about 15% annually in this scenario, though valuation multiples would contract.