Sensex at 1,00,000 by June 2027? IT may prove dark horse, says Morgan Stanley's Ridham Desai

Morgan Stanley on Monday assigned a 25 per cent probability to the BSE Sensex hitting 1,00,000 by June 2027. It said this bull case scenario was based on assumptions including oil prices staying below $80 a barrel, reflation policies beginning to deliver results, and earnings growth compounding at 19 per cent annually over FY2026-29. The foreign brokerage said India's relative valuation de-rating is cyclical and not secular in nature. It said the growth acceleration is in the pipeline, offering potential for the market valuations to reverse. 

With depressed trailing performance and foreign ownership, this could be very positive for equities going forward, Morgan Stanley said as its Equity Strategists Ridham Desai and Nayant Parekh assigned 50 per cent probability -- the base case, on Sensex kissing 89,000 by June 2027.  

Key trigger for market

Morgan Stanley said the country's growth appeared to have bottomed and is now trending higher, but continued to lag that of other economies, particularly those benefiting from the artificial intelligence capital expenditure cycle.

It said the principal catalyst is how the market gauges the growth gap between India and the world. That view may shift if global sentiment turns cautious on AI capex and India’s growth accelerates, it said. 

The June quarterly earnings season should therefore offer useful signals, and Morgan Stanley expects an upside surprise given strong high frequency indicators. 

"Investors may also watch the monsoon, though we do not share that worry. India, in our view, is amid far-reaching reforms that could meaningfully liberalise the framework for FPI flows. A rising wave of IPOs could lend further support until it turns excessive – a point we see as several months off," it said. 

Morgan Stanley portfolio strategy Morgan Stanley favours domestic cyclicals over defensives and externally facing sectors. It is overweight financials, consumer discretionary and industrials. The foreign brokerage is 'underweight' on energy, materials, utilities and healthcare. 

"IT services may prove the dark horse as the world turns to these firms to build AI applications and solutions. India’s chief risks are largely external, including geopolitical tensions and a slowing global economy. Domestically, we worry about weak farm productivity, capacity bottlenecks in the judiciary, and embodied AI weighing on labour markets," it said.