Sensex at 95,000 by December? Morgan Stanley bets on bull market after 'worst in history' show
Morgan Stanley kept its bull case (30 per cent probability) Sensex target of 1,07,000 and bear case (20% probability) target of 76,000 intact.
- Apr 9, 2026,
- Updated Apr 9, 2026 1:38 PM IST
Morgan Stanley, in its latest India strategy note, said India’s trailing market performance, valuations, positioning and earnings support a major recovery in Indian stocks over the coming months. The brokerage comments came as it called India's trailing 12-month market returns "almost the worst in history". It said relative valuations are at previous troughs. The brokerage retained its Sensex target of Rs 95,000 for December 2026.
"India’s share in profits exceeds its index weight by the highest margin ever, and the Sensex is nearly the cheapest ever in gold terms. FPI positioning has only weakened over the past several months. At the same time, it seems earnings up cycle has resumed with high-frequency data showing strength," Morgan Stanley said.
Morgan Stanley said the RBI has turned the sentiment on the rupee, which remains undervalued. Policy momentum looks strong too and the domestic bid has withstood a major market drawdown, it said.
The foreign brokearge said its base case Sensex target level suggests that the 30-pack index would command a trailing P/E multiple of 23.5 times, ahead of the 25-year average of 22 times. The premium over the historical average reflects greater confidence in the medium-term growth cycle, India's lower beta, a higher terminal growth rate and a predictable policy environment.
The target assumed a positive liquidity environment as the base case for monetary policy. It does not anticipate a bunching of issuances, and the retail bid keeping its nose ahead of the supply. Sensex earnings compound at 17 per cent annually through F2028 is the base case assumption.
Morgan Stanley kept its bull case (30 per cent probability) Sensex target of 1,07,000 and bear case (20% probability) target of 76,000 intact.
"The lack of direct AI play seems to be the most persistent challenge with potential AI disruption for Indian services exports aggravating matters. Market plumbing remains an issue – passive money needs to keep selling to keep pace with India’s falling index weight and hedge funds favour India as a funding short," it said.
Morgan Staley said persistency in positive growth signals it is ahead of consensus and expects positive earnings revisions. It sees continuing policy reform, which is now yielding structural benefits like India is seeing in the electricity sector. Morgan Stanley said there is evidence that AI is not hurting India but actually helping productivity. A sell-off in the AI trade; and surge in buybacks may create new marginal demand for stocks.
Downside risks arise from slowing global growth and worsening geopolitics, it said.
Morgan Stanley, in its latest India strategy note, said India’s trailing market performance, valuations, positioning and earnings support a major recovery in Indian stocks over the coming months. The brokerage comments came as it called India's trailing 12-month market returns "almost the worst in history". It said relative valuations are at previous troughs. The brokerage retained its Sensex target of Rs 95,000 for December 2026.
"India’s share in profits exceeds its index weight by the highest margin ever, and the Sensex is nearly the cheapest ever in gold terms. FPI positioning has only weakened over the past several months. At the same time, it seems earnings up cycle has resumed with high-frequency data showing strength," Morgan Stanley said.
Morgan Stanley said the RBI has turned the sentiment on the rupee, which remains undervalued. Policy momentum looks strong too and the domestic bid has withstood a major market drawdown, it said.
The foreign brokearge said its base case Sensex target level suggests that the 30-pack index would command a trailing P/E multiple of 23.5 times, ahead of the 25-year average of 22 times. The premium over the historical average reflects greater confidence in the medium-term growth cycle, India's lower beta, a higher terminal growth rate and a predictable policy environment.
The target assumed a positive liquidity environment as the base case for monetary policy. It does not anticipate a bunching of issuances, and the retail bid keeping its nose ahead of the supply. Sensex earnings compound at 17 per cent annually through F2028 is the base case assumption.
Morgan Stanley kept its bull case (30 per cent probability) Sensex target of 1,07,000 and bear case (20% probability) target of 76,000 intact.
"The lack of direct AI play seems to be the most persistent challenge with potential AI disruption for Indian services exports aggravating matters. Market plumbing remains an issue – passive money needs to keep selling to keep pace with India’s falling index weight and hedge funds favour India as a funding short," it said.
Morgan Staley said persistency in positive growth signals it is ahead of consensus and expects positive earnings revisions. It sees continuing policy reform, which is now yielding structural benefits like India is seeing in the electricity sector. Morgan Stanley said there is evidence that AI is not hurting India but actually helping productivity. A sell-off in the AI trade; and surge in buybacks may create new marginal demand for stocks.
Downside risks arise from slowing global growth and worsening geopolitics, it said.