Indian Stock Market Can Hit 1 Lakh Mark If …: Morgan Stanley's BIG Bull Prediction

In its latest equity strategy note, Morgan Stanley assigns a 50% probability to its base case scenario of the Sensex reaching 89,000 by June 2026, assuming strong domestic growth, sluggish but non-recessionary US growth, and stable oil prices.

“In our base case, we also assume a benign IndiaUS trade deal. We use another 50bps reduction in short-term interest rates and a positive liquidity environment as the base case for monetary policy. We do not anticipate a bunching of issuances, and the retail bid keeps its nose ahead of the supply. Sensex earnings compound at 16.8% annually through F2028,” it said.

For the Sensex to reach 1 lakh within the next 12 months, several conditions must align: oil prices need to stay consistently below $65, GST rates should be cut, there must be progress on farm law reforms, corporate earnings must grow at a CAGR of 19%, and global trade tensions should ease.

“Despite all the events of the past two months, Indian stocks remained orderly even when they declined with limited increase in implied volumes. Persistent retail buying underpins its structural nature. Foreign portfolios positioning is the weakest since we have had the data in 2000 and there are signs that their view on India is shifting,” Desai said.