Morgan Stanley Expects Sensex To Hit 1,05,000 By Dec 2025 Despite Market Decline

Despite the recent decline in the Indian stock market, analysts at financial services firm Morgan Stanley continue to remain optimistic. They predict that the Sensex could reach 1,05,000 by December 2025, representing a nearly 41 per cent increase from current levels.

However, their base-case scenario projects the Sensex to reach 93,000 by the end of 2025, which would be a 25 per cent rise. Meanwhile, in the worst-case scenario, the index could drop to 70,000, reflecting a 6 per cent decline.

Market Challenges And Volatility

This positive outlook comes despite challenges in global financial markets. In December 2024, Morgan Stanley had made a similar prediction, but since then, stock markets worldwide have faced increased volatility influenced by various factors including US President Donald Trump's tariff policies, which have created uncertainty.

Additionally, India's stock market has seen a significant outflow of foreign institutional investors (FIIs) due to concerns over high stock valuations and slower corporate earnings growth.

Why Morgan Stanley Remains Optimistic?

According to a research report co-authored by Ridham Desai, head of India research at Morgan Stanley, along with Upasana Chachra, Sheela Rathi, Nayant Parekh, and Bani Gambhir, the current market correction presents investment opportunities for stock pickers.

Desai noted that even though their bullish forecast could change when affected by a global recession or economic slowdown, India's market conditions still remain favourable.

The brokerage firm pointed out that current stock valuations are the most attractive since the COVID-19 period, making it a stock picker's market rather than one driven by broad economic trends. The firm remains bullish on cyclicals, defensives, small-caps, mid-caps, and large-cap stocks. They also maintain a positive stance on sectors like financials, consumer discretionary, industrials, and technology.

India's Economic Strengths And Future Growth

Morgan Stanley believes that India is on track to become one of the world's most attractive consumer markets driven by factors such as a major energy transition, rising credit-to-GDP ratios, and a growing manufacturing sector.
The firm also noted that many investors have overlooked key positives, such as the Reserve Bank of India's (RBI) supportive policy stance and the strong government budget announced in February 2025.

Consumption And Investment Outlook

Morgan Stanley expects consumer spending to improve in the coming years. They also predict that inflation will ease, with consumer prices expected to moderate to 4.3 per cent year-on-year (YoY) in FY27, compared to an estimated 4.9 per cent YoY in FY25. However, this largely depends on food price trends.

Global And Domestic Risks To Watch

Morgan Stanley is closely monitoring global and domestic risks that could impact India's market growth such as US trade and tariff policies, the strength of the US dollar, the Federal Reserve's interest rate decisions, and overall global financial conditions.

Domestically, they are keeping an eye on fiscal risks at the state level and any new government policies that could affect India's economic stability.

Other Brokerage Forecasts

While Morgan Stanley remains optimistic, other financial firms have set more conservative targets for the market. Bank of America (BofA) Securities has projected the Nifty50 to reach 25,000 by December 2025, citing attractive stock valuations after recent market corrections.

Nomura has set a Nifty50 target of 23,784, while Axis Securities revised its target to 24,600, considering risks such as uncertain global trade policies, rupee depreciation, and high stock valuations.