Indian equities expected to rebound as growth cycle turns upward, says Morgan Stanley; sets Sensex goal at 89,000

Equity market outlook: Morgan Stanley’s base scenario (with a 50% probability) envisions the Sensex reaching 89,000 by June 2026, implying a trailing P/E ratio of 23.5x, which is higher than its 25-year historical average. In the bull scenario, the brokerage projects the Sensex could touch 100,000, whereas the bear case estimates the index around 70,000. According to Morgan Stanley, the Indian equity market, which has seen a sharp correction since late September 2024, now seems positioned for a rebound amid a supportive macroeconomic backdrop and a reviving growth cycle. The benchmark indices — Sensex and Nifty 50 — currently trade about 2.5% below their record highs from September last year. This underperformance compared to other Asian and developed markets is largely attributed to a mix of slowing growth and elevated valuations. “India’s lack of direct exposure to AI-related opportunities is one factor. The delay in the India-US trade agreement has also added to market volatility. Moreover, India’s low beta works against it in a global equity bull phase,” remarked Ridham Desai and Nayant Parekh, equity strategists at Morgan Stanley. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.