In May 2025, Morgan Stanley revised its year-end target for India’s benchmark BSE Sensex to 82,000, down from its earlier optimistic forecast of 93,000. Despite the downgrade, the investment bank maintains a bullish outlook on Indian equities, citing India’s relative resilience compared to global markets and a still-strong domestic macroeconomic outlook.
The 9% upside from current levels reflects tempered optimism amidst moderating corporate earnings, concerns about inflationary pressures, and geopolitical volatility. Morgan Stanley’s analysts point to a declining correlation between Indian equities and global markets, which they view as a sign of decoupling. India’s equity market has historically been closely tied to trends in the U.S. and China, but in recent quarters, local factors have had greater influence.
In a bull-case scenario, Morgan Stanley sees the Sensex reaching 91,000, albeit with a 30% probability, down from their previous bull-case target of 105,000. This revision reflects caution over possible headwinds such as oil price volatility, delays in rural demand recovery, and tighter global liquidity conditions.
The bank also noted that earnings estimates have been slightly revised downward for several sectors, particularly FMCG and IT, due to slowing global demand and margin pressures. However, sectors like infrastructure, banking, and capital goods remain robust, buoyed by strong domestic consumption, rising private capex, and government infrastructure push.
Foreign institutional investors (FIIs) have shown renewed interest in Indian equities after a volatile 2023, driven by India’s stable political climate, expanding digital economy, and improving corporate governance. Domestic institutional investors (DIIs), including mutual funds and insurance companies, continue to provide strong support, mitigating external shocks.
India’s favorable demographic profile, reforms like PLI schemes, and ambitious government spending — including ₹11 lakh crore in the latest budget for infrastructure — add structural tailwinds to long-term growth.
Despite the modest downgrade in targets, analysts widely believe that India remains one of the most attractive emerging markets. With the upcoming general elections in 2026 and policy continuity expected, investor sentiment remains positive, especially if macroeconomic stability and earnings growth stay on track.
Morgan Stanley’s revision is seen not as a bearish turn, but a calibrated adjustment to evolving global dynamics — reaffirming India’s position as a standout performer in a turbulent global landscape.