Overview
- Base case assigns a 50% probability to the Sensex reaching roughly 85,000–89,000 by June 2026, with a 30% bull case at 100,000 and a 20% bear case at 70,000.
- Morgan Stanley expects returns to be led by profits, projecting about 19% annual Sensex earnings growth through FY28.
- The outlook rests on anticipated RBI easing, a CRR cut, lighter bank regulation, liquidity infusion, front-loaded government capex, and sizeable GST rate reductions.
- The firm says valuations cooled during the 2024–25 pullback and likely troughed in October 2025, improving the risk-reward balance.
- FPI positioning is near lows, with inflows seen dependent on growth recovery or a turn in global markets, while risks include a global slowdown, worsening geopolitics, and higher oil prices.