Sensex To Hit 1,05,000 By December 2025, Predicts Morgan Stanley

The Sensex is projected to touch 1,05,000 by December 2025 in their bull-case scenario, Morgan Stanley analysts have said. This implies a potential rise of nearly 41 per cent from current levels. Despite geopolitical concerns and trade tensions linked to Donald Trump's tariff policies, the brokerage remains optimistic about Indian equities. 

Sensex is a number that shows how the top 30 companies on India's stock market are performing – if it goes up, stocks are doing well; if it goes down, they are not.

Morgan Stanley's base-case scenario estimates the Sensex at 93,000 by December 2025, a 25 per cent rise. In a bear-case scenario, the index could drop nearly 6 per cent to 70,000 levels.

• A base case is the most likely or expected scenario based on current market conditions, assuming no major surprises.
• A bull case means the market is expected to rise, driven by strong economic growth and positive factors.
• A bear case means the market may fall due to weak economic conditions, high inflation, or global slowdowns.

Ridham Desai, Head of India Research and India Equity Strategist at Morgan Stanley, co-authored a report with Upasana Chachra, Sheela Rathi, Nayant Parekh, and Bani Gambhir, saying that Indian equity markets appear oversold, presenting a stock pickers' opportunity.

According to Morgan Stanley, global factors such as US policy and global growth rates will be crucial for market recovery. The firm talked about India's emerging status as a key consumer market, its major energy transition, and the rising credit-to-GDP ratio as significant growth drivers.

"The market has ignored the RBI's policy pivot and a strong budget from the government. India's low beta characteristic makes it an ideal market for the uncertain macro environment. Our sentiment indicator is in strong buy territory," Mr Desai said.

Consumption is set to grow as tax cuts boost urban spending and rural demand stays strong. Inflation is expected to be 4.3 per cent in FY27, according to Morgan Stanley. In terms of investment, public and household capital expenditure (CapEx) will drive growth, while private corporate CapEx recovers gradually.

Bull And Bear Case Scenarios

Bull Case (1,05,000 Sensex Target):

• Oil prices remain below $70 per barrel.
• Lower domestic inflation leads to RBI rate cuts.
• Energy balance improvements and government reforms, including GST rate cuts and progress on farm laws.
• Sensex earnings compound at 20 per cent annually from FY24 to FY27.

Bear Case:

• Oil prices rise above $110 per barrel.
• RBI tightens rates to maintain macro stability.
• Global growth slows significantly, with the US slipping into recession.
• Sensex earnings compound at 15 per cent annually until FY26, with equity multiples derating due to weaker macros.

Morgan Stanley is "Overweight" on financials, consumer discretionary, industrials, and technology stocks, while maintaining an "Underweight" stance on consumer staples, energy, healthcare, utilities, and materials. Overweight means these sectors are expected to perform well, and Morgan Stanley recommends investing more in them. Underweight means they expect weaker performance and suggest investing less in those sectors.

Morgan Stanley's Focus List
The brokerage's focus list includes 10 stocks, with their price targets and potential upsides:

• Brainbees Solutions: Overweight rating, price target Rs 818 (+29 per cent potential upside)
• Maruti Suzuki: Overweight rating, price target Rs 14,124 (+19 per cent)
• Trent: Overweight rating, price target Rs 8,032 (+11 per cent)
• Reliance Industries: Facing selling pressure after a 20 per cent correction from its peak.
• ICICI Bank: Price target Rs 1,650 (+30 per cent)
• SBI Life: Price target Rs 2,240 (+52 per cent)
• Hindustan Aeronautics: Price target Rs 5,292 (+27 per cent)
• L&T: Price target Rs 3,875 (+5 per cent)
• Infosys: Price target Rs 2,150 (+10 per cent)
• UltraTech Cement: Price target Rs 13,620 (+15 per cent)