Global brokerage Morgan Stanley on Thursday projected a strong upside for Indian equities, saying the BSE Sensex could climb to 95,000 by December 2026.
The estimate suggests a potential gain of around 22 per cent from Wednesday’s closing level. The brokerage said the current market setup, marked by lower valuations, early signs of earnings recovery and cautious investor positioning, is typically seen when a downturn is nearing its end.
Why Morgan Stanley sees room for a rally
In its latest India Equity Strategy Playbook, the firm said risks on the downside appear limited compared to the upside potential, making this phase favourable for long-term investors to enter the market.
It noted that Indian equities have underperformed over the past year, with valuations correcting sharply. Despite this, the broader economic picture remains stable. Strong domestic demand, a consistent policy environment and a pick-up in capital spending are supporting growth.
The brokerage also flagged improving earnings trends as a key trigger. High-frequency data shows strengthening activity across consumption, investment and services, even as market expectations remain modest.
Analysts added that India’s share in global corporate profits has now surpassed its weight in benchmark indices by the widest margin seen so far.
Foreign investor positioning, which has weakened recently, could turn supportive if earnings continue to improve. The brokerage said it expects earnings upgrades ahead and believes its projections are still ahead of broader market consensus.
Valuations at attractive levels, says report
Morgan Stanley highlighted that the Sensex is currently trading at relatively low levels when compared to gold, a metric often linked to major turning points in markets.
It also pointed out that price-to-book valuations are near long-term lows, even as macroeconomic stability holds steady and policy risks remain contained.
While global risks such as geopolitical tensions and slower growth persist, the brokerage said the overall outlook suggests a steady recovery in Indian equities.