According to the analysts in Morgan Stanley, now the recent correction in the Indian stock market is over and the next stage of growth is ready to take off. The global investment bank believes that there is a high potential of Indian equities, which has been aided by the fact that the macroeconomic environment has been improving and the measures being taken by the government, which is likely to drive growth.
According to its most recent report, Morgan Stanley projects that under its bull case, the Sensex would hit the 100,000 mark by June 2026, which it gives a 30 percent chance. In the base-case scenario, which is associated with a 50 percent probability, the index is likely to hit 89,000, meaning that the index should increase by approximately 6.6 percent. In the meantime, in the bear scenario, Sensex will decline to 70,000, which is a 20-percent chance of a decline of 16 percent.
The reason is that the brokerage house is confident that India will not continue to perform poorly as compared to other emerging markets; this is because some of the major macro factors will begin working in their favour. Some of the best Indian stocks that Morgan Stanley has overweight in include Maruti Suzuki, Trent, Titan Company, Varun Beverages, Reliance Industries (RIL), Bajaj Finance, ICICI Bank, Larsen and Toubro (L&T), UltraTech Cement and Coforge.
Managing Director and Chief India Equity Strategist at Morgan Stanley, Ridham Desai says that in the next quarters the growth cycle of India is set to pick up. The report, written along with Nayant Parekh, points out that the Reserve Bank of India (RBI) and the government are taking a central role using interest rate cuts, reducing cash reserve ratio (CRR), injecting cash, deregulating banks, front-loading capital expenditure, and almost 1.5 trillion reduction in GST rates.
Morgan Stanley concludes that the stock market in India is changing to a macro-driven stage, with the stock-picking will give way to the general economic trends supporting the hope that it will work out in the long-term investor.
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