Rama Krishna Sangem
All indicators suggest to a possible bull case in 2026, Morgan Stanley has pegged the Sensex target at 1,07,000, assuming oil stays below $65 per barrel, reflation policies deliver stronger growth, and global trade tensions ease with tariff reversals. Earnings growth is expected to compound at 19% annually over FY25–28.
Morgan Stanley prefers domestic cyclicals over defensives and external-facing sectors. Morgan Stanley prefers domestic cyclicals over defensives and external-facing sectors.
The Indian stock market is expected to regain its mojo in 2026 after delivering its worst relative performance to emerging markets (EM) in 31 years, according to analysts at Morgan Stanley. In its latest India strategy report, the global brokerage firm has set a bull-case Sensex target of 107,000 by December 2026, and a base-case target of 95,000.
Morgan Stanley Equity Strategists Ridham Desai and Nayant Parekh argue that the policy pivots and a reflation push are laying the groundwork for a strong recovery in nominal growth and corporate earnings after a mid-cycle slowdown over the past year.
They noted that the relative valuations have corrected meaningfully and likely bottomed in October, while foreign portfolio investors (FPI) exposure remains the lightest in history.portfolio investors (FPI) exposure remains the lightest in history.
At the same time, the structural domestic bid for equities remains intact, supported by rising household allocation to stocks.
The global brokerage believes India is set for a positive growth surprise, underpinned by the combined reflation effort of the RBI and the government through rate cuts, a CRR cut, bank deregulation and liquidity infusion, front-loaded capex and around ₹1.5 lakh crore of GST rate cuts tilted towards mass consumption.
“The thawing of relations with China and China’s anti-involution drive add to the mix. A likely India-US trade deal should further boost sentiment. Thus, India’s hawkish post-Covid macro setup is now unwinding,” Morgan Stanley said in a report.
