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Morgan Stanley Lays Out 2026 Sensex Targets as India Stocks Rebound

Morgan Stanley says policy easing will set up a 2026 earnings recovery.

Overview

  • The brokerage’s roadmap sets a base-case Sensex target of 95,000 by December 2026, a bull case of 107,000 with a 30% probability, and a bear case of 76,000.
  • Earnings are projected to compound about 17% annually through FY28 in the base case and 19% in the bull case, supported by easier policy and liquidity.
  • Recommended positioning tilts to domestic cyclicals such as financials, consumer discretionary and industrials, with underweights in energy, materials, utilities and healthcare.
  • Catalysts flagged include a potential 25 bps rate cut, improved system liquidity, possible GST rationalisation and a likely IndiaUS trade deal, with foreign investor positioning described as the lightest in history.
  • After a brief setback on Nov 18, the market rebounded on Nov 19 with the Sensex up 513 points to 85,186 as IT shares led gains and domestic institutions bought, though risks such as oil above $100 and weaker global growth remain in focus.