Mumbai: Global investment firm Morgan Stanley has released a strategy outlook report, saying that India’s Sensex could reach 1,07,000 by next year if macroeconomic factors remain favourable. In its report, the firm assigned a 50% probability for this prediction to play out in the next 12 months. This means that Sensex could have a price to earnings multiple of 23.5 times, higher than the historial 25 year index average of 22 times.
Morgan Stanley believes that 2026 will result in macro trade of stocks, rather than selective stock picking that defined this year.
According to Ridham Desai, author of the report and Chief Equity Strategist at Morgan Stanley India, the government’s policy pivots and a reflection push are laying the groundwork for a strong recovery and subsequent growth in equities.
“The market may have largely priced in expectations for growth tied to leadership continuity, but we see a number of reasons, such as growing domestic investment in equities, improving social equity and a fast-evolving tech sector, that support earnings cycle growth and a corresponding lift to share prices,” Ridham Desai said.
In the report, Ridham said the easing of the Indo-US tariff situation could help the Sensex rise eventually
“In our base case, we anticipate a resolution to the tariff situation between India and the US in the weeks ahead. We use another 25 basis point (bps) reduction in short-term interest rates and a positive liquidity environment as the base case for monetary policy,” he wrote in the report, co-authored with Nayant Parekh.
The report by Morgan Stanley focuses on stocks impacted by domestic cyclical factors, rather than external ones. It expects companies in the Financial, FMCG, and Industrial sectors to perform better than the benchmarks, while energy, materials, utility and healthcare sector companies may not do so.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in stocks includes financial risks, and past performance is not indicative of future results. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
