Sensex to Hit 107,000 by 2026? Morgan Stanley Issues Bold Forecast

Morgan Stanley expects Indian equities to regain strength by 2026, projecting a bull-case Sensex target of 1,07,000 by December 2026. Assigned a 30% probability, this upbeat scenario assumes low crude prices, favourable global trade realignments, policy support, and solid economic expansion, which could drive Sensex earnings to grow at 19% annually between FY25 and FY28. According to the brokerage’s strategy outlook, the Indian market could rally nearly 27% from current levels if macro and policy conditions remain supportive. The bullish case factors in crude staying below $65/barrel, easing global tariffs, reflationary policies, and strong domestic momentum. Even under its base case (50% probability), Morgan Stanley sees the Sensex reaching 95,000 by end-2026, implying a 13% rise. This projection assumes continued macro stability, fiscal discipline, healthy private-sector capex, steady global growth, and potential domestic rate cuts. Earnings are expected to grow at a 17% CAGR through FY28. The bear case, driven by risks such as crude rising above $100, tighter monetary conditions, or weak external demand, puts the index at 76,000. Analysts Ridham Desai and Nayant Parekh argue that Indian equities are poised for a turnaround after their weakest relative performance in three decades. They cite a policy pivot, improving nominal growth, and historically light FPI positioning as major catalysts. Additional triggers include anticipated rate cuts, enhanced liquidity, and consumption boosters such as possible GST reductions in key sectors. Stronger external fundamentals—lower oil dependence, robust services exports—and structural strengths like policy stability, infrastructure upgrades, and rising domestic investor participation further reinforce the outlook. Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.