Morgan Stanley turns bullish on India, sees Sensex at 89,000 by June 2027
Global brokerage Morgan Stanley has backed the India growth story, projecting the Sensex to climb to 89,000 by June 2027 in its base-case scenario, implying an upside of around 16 per cent from current levels. The brokerage said India is entering a multi-quarter growth upcycle, which it believes has not yet been fully reflected in equity valuations.
In a report titled “A Long Way Up”, Morgan Stanley’s India equity strategists Ridham Desai and Nayant Parekh said the 89,000 Sensex target corresponds to a trailing price-to-earnings (P/E) multiple of 23.5 times. This is above the index’s 25-year average of 22 times. Morgan Stanley has assigned a 50 per cent probability to this base-case outcome.
The brokerage has also outlined bullish and bearish scenarios for the benchmark index. Under its bull case, which carries a 25 per cent probability, the Sensex could rise to 1,00,000, representing an upside of about 31 per cent. This scenario would be supported by crude oil prices falling below $75 a barrel and reflationary policies lifting growth expectations. For the bull case to materialise, Sensex earnings would need to compound at an annual rate of 19 per cent between FY26 and FY29.
On the other hand, Morgan Stanley's bear case, also assigned a 25 per cent probability, puts the Sensex at 66,000, implying a downside of around 14 per cent.
This scenario could emerge if crude oil prices average above $120 a barrel, forcing the Reserve Bank of India to tighten monetary policy to preserve macroeconomic stability, while a sharp slowdown in global growth weighs on the domestic economy. Sensex earnings would grow at a slower 13 per cent annual rate between FY25 and FY28 under this scenario.
Morgan Stanley's base case rests on further improvement in India's macroeconomic stability, a revival in private-sector investment and a favourable gap between real economic growth and real interest rates. The brokerage also expects steady global growth and a benign monetary policy environment in India to support equities.
The brokerage expects Sensex earnings to compound at 16 per cent annually through FY29, providing a key foundation for its positive market outlook. It believes the combination of earnings growth and improving domestic economic conditions could allow Indian equities to sustain their upward trajectory despite relatively elevated valuations.
