Sensex to touch 82,000 by December 2025, Morgan Stanley lowers earlier target of 93,000

The revised forecast comes amid rising selling pressure in global markets following the new tariff policies announced by US President Donald Trump.

Despite the downgrade, the new target still suggests an upside of nearly 9 per cent from current levels. Morgan Stanley believes the Indian market will continue to outperform global peers, supported by its lower market volatility and strong macro fundamentals.

It said "Our BSE Sensex target of 82,000 (down from 93,000) implies upside potential of 9 per cent to December 2025".

The firm noted that the Indian equity market is now transitioning from being macro-driven to one that will be led more by individual stock selection. As a result, the brokerage has reduced its active positions in its sector model portfolio from an average of 180 basis points to 80 basis points.

In terms of sector preferences, Morgan Stanley remains overweight on financials, consumer cyclicals, and industrials. It is underweight on energy, materials, utilities, and healthcare sectors.

The firm highlighted several India-specific factors that could act as catalysts for market performance. These include the Reserve Bank of India's dovish stance, potential GST rate cuts that could stimulate consumption, the possibility of a trade deal with the US, and improving domestic growth data.

Morgan Stanley's base case projection of 82,000 for the Sensex is based on expectations of continued macroeconomic stability, fiscal consolidation, increased private investment, and a positive gap between real GDP growth and real interest rates. This scenario has been assigned a 50% probability.

The bull case, which carries a 30 per cent probability, sees the Sensex reaching 91,000 by December 2025. This would require oil prices to remain below USD 70 per barrel, leading to lower inflation in India and potentially prompting the RBI to cut rates further.

At the 82,000 level, the Sensex would trade at a trailing price-to-earnings (P/E) ratio of 23 times--higher than the 25-year average of 21 times.

Morgan Stanley believes this premium valuation reflects investor confidence in India's medium-term growth outlook, supported by policy predictability and a strong economic foundation.