Morgan Stanley sees India’s BSE Sensexhitting 89,000 by June 2026 and views the recent decline in Indian stocks from their September 2024 peak as a buying opportunity. The new target for June 2026 is the global brokerage firm’s base case projection.The firm also suggests a 30% likelihood of the index reaching 100,000 (1 lakh) in their optimistic scenario.“Our new Sensex June 2026 target of 89,000 (8% upside) bakes in our new earnings estimates and is also rolled forward from the December 2025 target of 82,000,” states Morgan Stanley’s equity strategist Ridham Desai, noting that this projection implies a trailing P/E ratio of 23.5x, surpassing the 25-year average of 21x.The Sensex reaching 1 lakh within the next 12 months would require several conditions: oil prices consistently remaining under $65, implementation of GST rate reductions, advancement in farm legislation, earnings growth CAGR of 19%, and easing of global trade tensions.The higher valuation compared to historical averages reflects increased confidence in India’s mid-term growth trajectory, reduced market volatility, enhanced terminal growth expectations, and a stable policy framework.Also Read | India eyes three-phase trade deal with US as Donald Trump’s reciprocal tariffs loomAccording to an ET report, Morgan Stanley’s latest equity strategy report assigns a 50% probability to the Sensex reaching 89,000 (base case), contingent upon strong domestic growth, moderate US growth without recession, and stable oil prices.In the base scenario, we anticipate a favourable India-US trade agreement, alongside a further 50bps reduction in short-term interest rates and positive liquidity conditions as the monetary policy foundation. The retail demand is expected to maintain its lead over supply, without clustering of issuances. Sensex earnings compound at 16.8% annually through F2028, it said.“Despite all the events of the past two months, Indian stocks remained orderly even when they declined with limited increase in implied volumes. Persistent retail buying underpins its structural nature. Foreign portfolios positioning is the weakest since we have had the data in 2000 and there are signs that their view on India is shifting,” Desai said.Also Read | Gold vs Nifty 50: Yellow metal emerges as best performing asset in FY25, but Indian equities outperform in long-termRegarding India portfolio strategy, the brokerage maintains higher weightage in financials, consumer discretionary, and industrials sectors, while reducing exposure in energy, materials, utilities, and healthcare.“This is likely to be a stock pickers’ market, in contrast to one driven by top-down or macro factors since the Covid pandemic. Thus, our average active sector position is just 80bps. We are capitalization-agnostic,” he said.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
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