Sensex likely to hit 89,000 mark by June next year: Morgan Stanley

Global brokerage Morgan Stanley expects the benchmark Sensex to hit 89,000 mark by June 2026, indicating a marginal growth of around 8% from its current level.

The latest trading data show the Sensex at 81,642, reflecting a half-percent increase. In its report, the foreign brokerage highlighted several robust fundamental factors that favour domestic equities.

Additionally, Morgan Stanley emphasised "technical supportive" elements like ongoing retail investor purchases, low market volatility, and the weakest positioning of foreign portfolio investors since 2000.

Sensex has gained 4.29% this year and risen 10.20% in a year. On similar lines, Nifty gained 4.80% in 2025 and rose 10% in a year. 

“Strong macro stability with improving terms of trade, declining primary deficit, and low inflation volatility; mid- to high-teens earnings growth annually over the next three to five years, led by an emerging private capex cycle, releveraging of corporate balance sheets, and a structural rise in discretionary consumption; a reliable source of domestic risk capital; a dovish RBI; ranged oil prices; and two positives from the recent geopolitical event: (i) India has a new doctrine on terror which makes future terror attacks an act of war, a strong deterrent to future terror strikes, also making it easy for future governments to act decisively against terror, unlike the past, and (ii) upside surprise in military performance underscoring strong progress made in strategy, air combat, navigation and precision attacks,” a note from Morgan Stanley said.

When it comes to investment strategy, Morgan Stanley recommends a "defensive and external-facing" stance, with a preference for sectors including Industrials, Underwater Energy, Materials, Utilities, and Healthcare. They anticipate the upcoming market environment will favour stock selection over macroeconomic influences, a shift from the trends observed since the Covid pandemic.

However, the brokerage also recognised the existence of significant risks.
“A global recession or near recession would challenge our call. Long-term concerns include capacity constraints in the judiciary, AI’s effects on the tech industry, low productivity in the farm sector, and state-level fiscal challenges.”