Morgan Stanley Predicts End to Indian Market Correction, Foresees Sensex at 100,000 by 2026

Morgan Stanley analysts believe India's stock market correction is over, as factors causing its underperformance relative to emerging market peers are reversing. They forecast three scenarios for the Sensex: a bull case (30% probability) of 100,000 by June 2026, a base case (50% probability) at 89,000, and a bear case (20% probability) at 70,000. Morgan Stanley maintains an 'overweight' rating on 10 specific Indian stocks, including Maruti Suzuki India Limited, Trent Limited, Titan Company Limited, Varun Beverages Limited, Reliance Industries Limited, Bajaj Finance Limited, ICICI Bank Limited, Larsen & Toubro Limited, UltraTech Cement Limited, and Coforge Limited. The firm expects India to transition into a market driven by macroeconomics rather than just stock-picking. India's growth is set to accelerate, fueled by Reserve Bank of India (RBI) and government stimulus (like rate cuts and capex), improved international relations, and favorable fiscal policies. Valuations have corrected, and factors like falling oil intensity in GDP and rising exports suggest structurally lower real rates and potentially higher P/E ratios. Risks include global slowdown and geopolitics, while catalysts include RBI rate cuts and privatization.

**Impact**: This analysis from Morgan Stanley significantly impacts the Indian stock market by providing a strong bullish outlook, potentially boosting investor confidence, attracting capital, and driving market valuations higher. The specific stock recommendations offer actionable investment insights. The projected Sensex targets suggest considerable upside potential. Rating: 9/10.

**Heading: Difficult Terms and Meanings** * **Emerging Market (EM)**: Countries undergoing rapid growth and industrialization, not yet fully developed. * **Sensex**: A benchmark index of 30 large stocks on the Bombay Stock Exchange (BSE). * **Reflation**: Economic policies to increase economic activity, often by lowering interest rates or increasing money supply. * **Cash Reserve Ratio (CRR)**: Portion of deposits banks must hold with RBI; a cut increases lendable money. * **Capital Expenditure (Capex)**: Funds for acquiring or upgrading physical assets like property and infrastructure. * **Goods and Services Tax (GST)**: A consumption tax; rate cuts can stimulate demand. * **Hawkish Macro Setup**: Economic focus on controlling inflation, often via high interest rates. Its unwinding means less focus on inflation control. * **Gross Domestic Product (GDP)**: Total value of goods/services produced in a country. * **Real Rates**: Interest rate minus inflation rate, showing true borrowing/lending cost. * **Beta**: Stock's volatility relative to the market. * **Price-Earnings (P/E) Ratio**: Stock price relative to per-share earnings, indicating valuation. * **Foreign Portfolio Investor (FPI)**: Investment by foreign entities in a country's financial assets.