Morgan Stanley eyes Sensex rebound, sees 89,000 target
Indian stock markets appear ready to rebound from recent declines as economic conditions shift in favor of equities, according to an analysis released on Tuesday. Morgan Stanley assigned a 50 percent chance that the BSE Sensex will climb to 89,000 by June 2026, representing gains of roughly 6 percent from current levels.
The American investment bank cited several factors supporting a turnaround, such as accelerated government infrastructure spending, tax reductions worth approximately 1.5 trillion rupees, and monetary policy adjustments by the Reserve Bank of India. Earlier weakness stemmed from elevated price multiples, slower expansion during late 2024, and limited exposure to artificial intelligence trends. The firm noted that relative valuations likely bottomed out during October.
Analysts at the bank favor sectors tied to domestic economic activity over defensive industries, recommending increased positions in financial services, consumer discretionary companies and industrial firms. Improving trade relations between India and China, along with prospects for a commercial agreement between Washington and New Delhi, should lift investor confidence. Lower inflation variability and declining interest rates may support higher earnings multiples going forward, the report stated.
