Morgan Stanley projects Sensex to reach 91,000 by December 2025. Investment is advised in the financial, consumer cyclical, and industrial sectors.
Sensex target 2025: Morgan Stanley analysts have revised their Sensex target to 82,000 by December 2025, down from the previous projection of 93,000. However, this target still represents approximately a 7% increase from current levels, with a 50% probability of achievement. This projection is based on assumptions of b macroeconomic stability in India, robust domestic growth, and controlled crude oil prices.
Strong Economic Conditions in India
According to Morgan Stanley, sustained economic stability in India could lead to positive Sensex performance. They are optimistic about India's fiscal strength, increased private investment, and a balanced approach to interest rates. Furthermore, they do not anticipate a recession in US markets, while controlled crude oil prices are seen as beneficial to India's economic situation.
Focus on Financial, Consumer Cyclical, and Industrial Sectors
Morgan Stanley analysts recommend an "overweight" position (increased investment) in the financial services, consumer cyclical, and industrial sectors. Conversely, they advise caution regarding investments in the energy, metal, utility, and healthcare sectors. Investors anticipate a 50 basis point reduction in short-term interest rates, which would create a positive liquidity environment.
Bull Case: Sensex could reach 91,000
If the government implements reformative policies such as GST reductions and progress on agricultural laws, the Sensex could reach 91,000 by December 2025. Morgan Stanley assigns a 30% probability to this scenario. This scenario assumes an 18% annual earnings growth, crude oil prices below $70 per barrel, and further interest rate cuts by the RBI.
Bear Case: Sensex could fall to 63,000
If crude oil prices rise above $100 per barrel, the RBI raises interest rates to control inflation, and global economic recessionary challenges arise, the Sensex could fall to 63,000. Morgan Stanley assigns a 20% probability to this scenario, which projects a 13% earnings growth rate for the Sensex during FY25-28.
