US tariffs effect: Morgan Stanley trims Sensex target, lowers FY26 growth estimate 

Global brokerage Morgan Stanley has lowered its year-end target for Sensex to 82,000, an upside of 9% from the current levels. Earlier, the brokerage expected Sensex to hit 93,000 mark by year-end. The brokerage attributed the revision of Sensex target to high tariffs imposed by the US and their likely impact on global economic growth. 

However, the brokerage expects relative benefits for domestic markets since US tariffs on India are a little lower than those imposed on key competitors such as China, Vietnam, and South Korea. 

Morgan Stanley has maintained its 'overweight' stance on financial, consumer cyclicals and industrials stocks, while staying "underweight" on energy, materials, utilities, and healthcare 

The brokerage has also lowered its FY26 GDP growth estimate by 40 basis points to 6.1%. 

On April 2 this year, US President Donald Trump introduced a series of tariffs targeting 70 trading partners, impacting market sentiments. As a result, the Sensex remains down by 1.67%, while Nifty has decreased by 1.27% in 2025, despite the market experiencing record-breaking rallies in the recent sessions.

Trump's tariff announcements on what he called "Liberation Day" shook global markets significantly. He rolled out a comprehensive set of 'reciprocal' tariffs, which further escalated the ongoing trade war with key trading partners and heightened concerns about a potential recession in the global economy.

In its monetary policy on April 9, RBI lowered its projected GDP growth for 2025-26 at 6.5 percent against its earlier assessment of 6.7 percent. This essentially reflects the impact of global trade and policy uncertainties.

"Growth projection for this fiscal has been marked down by 20 basis points, reflecting global trade and policy uncertainties," said Governor Sanjay Malhotra, while announcing MPC decisions. Trump had imposed a 26% additional tariff on India, threatening the country's economic growth. 

Brokerages were not far behind. UBS lowered its GDP growth forecast for India from 6.3% to 6%, citing a 25 basis point impact due to the recent tariff hikes. Goldman Sachs has also revised its estimate down to 6.1%, while Citi is anticipating a 40 basis point effect from both direct and indirect tariff impacts. QuantEco Research has estimated a 30 basis point influence, and both HSBC and UBS Securities have cautioned about a potential drag of 20 to 50 basis points this fiscal year.