Daijiworld Media Network – Mumbai
Mumbai, Nov 5: The correction in the Indian stock market is over, according to analysts at Morgan Stanley, who believe the key factors behind India’s underperformance compared to emerging market peers are reversing.
In its latest report, the global brokerage said that in a bull-case scenario with a 30 per cent probability, the Sensex could reach the 100,000 mark by June 2026. In the base-case scenario, with a 50 per cent probability, the Sensex is expected to hit 89,000 levels, up about 6.6 per cent from the current levels. The bear-case scenario, with a 20 per cent probability, pegs the index at 70,000, down 16 per cent from the current levels.
Among the stocks where Morgan Stanley remains overweight are Maruti Suzuki, Trent, Titan Company, Varun Beverages, Reliance Industries, Bajaj Finance, ICICI Bank, Larsen & Toubro, UltraTech Cement, and Coforge.
The Indian market, the report noted, is transitioning into one driven by macroeconomic factors, making stock-picking less dominant. Ridham Desai, Managing Director and Chief India Equity Strategist at Morgan Stanley, along with Nayant Parekh, stated that India’s growth cycle is set to accelerate, supported by the Reserve Bank of India and government-led reflation efforts through rate cuts, CRR reduction, bank deregulation, liquidity infusion, front-loaded capex, and nearly Rs 1.5 trillion in GST rate cuts.
The thawing of relations with China, China’s anti-involution measures, and the possibility of an India-US trade deal are also expected to boost sentiment. Morgan Stanley said India’s hawkish macro set-up after the pandemic is now unwinding, with relative valuations having corrected and likely bottomed out in October.
With falling oil intensity in GDP, a higher share of exports, especially services, and fiscal consolidation, Morgan Stanley expects structurally lower real rates and reduced volatility in inflation and interest rates. The report added that a period of high growth, low volatility, and declining interest rates will support higher price-earnings ratios and a shift of household savings toward equities.
The key risks cited include slowing global growth and worsening geopolitical tensions. However, the brokerage expects positive earnings revisions, RBI rate cuts, privatisation of public sector companies, and lower US tariffs on India to act as catalysts for the next phase of market growth.
Foreign portfolio investor positions remain near lows, but renewed buying is expected as domestic growth strengthens. If these conditions align, analysts believe India is poised for its next major bull run, with the Sensex potentially reaching the historic 1 lakh milestone by mid-2026.