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Informist, Tuesday, Apr. 15, 2025

 

--Morgan Stanley cuts BSE Sensex target for Dec 2025 by 12% to 82,000 points 

 

MUMBAI – Morgan Stanley has cut its target of BSE Sensex for December by 12% to 82000 points, which implies a 7% rise from current levels. Additionally, the US-based investment banker cut its earnings estimates for Sensex by 13% in 2025-26 (Apr-Mar) amid concerns of impact on growth due to US tariffs. 

 

Apart from this, Morgan Stanley has also lowered India's FY26 GDP growth forecast by 40 basis points to 6.1%, and sees the economy expanding at a slower pace of 6.3% in the next financial year. Previously, the investment bank had expected India's GDP to grow 6.5% in both FY26 and FY27.

 

Morgan Stanley reduced the GDP growth forecasts due to the current US policy on tariffs, the prospects of China's retaliation, and accompanying uncertainty. But, the investment banker believes there would be recovery in domestic growth on major pickup in government spending and the dovish stance of the Reserve Bank of India. "The emerging global trade war could actually end up benefiting India with a greater share in global goods trade, although we are not incorporating that in our forecasts as yet," Morgan Stanley said.

 

Despite a cut in earnings estimates, Morgan Stanley expects earnings per share of Sensex to rise nearly 11% in FY26, higher than the 7% growth expected in FY25. It said improving private capital expenditure cycle, releveraging of corporate balance sheets, a robust banking system, lower dependence on oil, and rise in discretionary consumption will aid earnings growth. It is overweight on companies related to financials, consumer cyclicals, and industrials, and is underweight on energy, materials, utilities, and healthcare.

 

While Morgan Stanley expects Sensex rising to 82,000 points in its base case, it argued that the Sensex can rise to 91,000 points in a bull case, implying a rise of nearly 19% from current levels. Sensex can achieve the bull case target if the trade war subsides, oil stays below $70 per barrel, and lower inflation pushes the Reserve Bank of India to announce more interest rate cuts. It said there is a 30% probability of the Sensex achieving the bull case.

 

However, if oil prices surge to $100 per barrel, the RBI ends up raising interest rates, global economic growth sees a meaningful slowdown, or the US slips into recession, the Sensex may fall to 63000 points, Morgan Stanley said. This implies a fall of 18% from current levels. Morgan Stanley sees a 20% probability of this kind of a fall. At 1417 IST, the Sensex was up 2% at 76754 points.  End

 

US$1 = INR 85.73

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Gopika Balasubramanium

Edited by Tanima Banerjee

 

 

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