Latest news with #NayantParekh
New Indian Express
04-08-2025
- Business
- New Indian Express
Morgan Stanley sees Sensex hitting 1 lakh mark by next July in bull case scenario
MUMBAI: Despite the continuing bloodbath in the market amid tariff woes, Wall Street major Morgan Stanley has pegged the benchmark Sensex at the 1-lakh-mark by July 2026 in a bull case scenario, which has a 30% probability, citing several triggers for the potential rally. But in a bear case scenario, with a probability of 20%, the Sensex may plunge to 70,000 by July 2026, while in a base case scenario, the index may scale to 89,000, with a 50% probability. The Sensex is massively down from the all-time peak of 85,978.25 it gained in the last week of September 2024 and after bleeding for five days, it closed with 0.52% at 81,019 on Monday. Morgan Stanley's analysts Ridham Desai and Nayant Parekh said on Monday that there is a strong case for rerating of the domestic stock markets. "Get ready for new highs in the months ahead," they said noting that the country is likely to gain more share in global output in the coming decades, driven by strong foundational factors. These include strong population growth, a functioning democracy, macro stability-influenced policy boosts, better infrastructure, rising entrepreneurial class, and improving social outcomes. Immediate triggers for a rally are a favourable trade deal with the US, more capex announcements, bank credit growth, uniform improvement in high frequency data and improving trade with China. Explaining how they came to the possibility of the Sensex hitting the key milestone of 1,00,000 by next July, they said in the 'base case' scenario, which has 50% probability, it will hit an all-time high of 89,000 by July. "This level assumes continuation in the country's gains in macro stability via fiscal consolidation, increased private investments, and a positive gap between real growth and real rates. Robust domestic growth, slow growth in the US but no recession, and benign oil prices are also part of our assumptions. In our base case, we also assume a benign trade deal with the US," they added.
Mint
04-08-2025
- Business
- Mint
Morgan Stanley sees Sensex at 89K by June 2026 on re-rating in Indian stock market
Indian equities are poised for a structural re-rating, with the BSE Sensex projected to scale new highs over the next 12 months, according to a recent strategy note by Morgan Stanley. Equity strategists Ridham Desai and Nayant Parekh have set Sensex target of 89,000 for June 2026, implying a 10% upside from current levels. This strong case for re-rating and the bullish forecast rests on fundamental shifts taking place in the Indian economy — ranging from a robust demographic profile to rising macroeconomic stability and a more predictable policy environment. Morgan Stanley argues that India is likely to gain share in global output, backed by core strengths like its demographic dividend, a functioning democracy, macro stability-influenced policy, better infrastructure, and rising entrepreneurship. These forces are expected to transform India into the world's most sought-after consumer market over the coming decades, while also accelerating its energy transition, credit to GDP, and manufacturing share in GDP. The strategists highlight a significant structural tailwinds - India's falling intensity of oil GDP, rising services exports, and ongoing fiscal consolidation. These trends are helping reduce the country's saving-investment imbalance, potentially keeping real interest rates structurally lower. At the same time, lower inflation volatility as a result of both supply-side and policy changes (flexibility inflation targeting) mean that volatility in interest rates and growth rates is likely falling in coming years. 'High growth with low volatility and falling interest rates and low beta = higher P/E multiple,' the report said. While earnings saw a temporary soft patch beginning in Q2FY25, Desai and Parekh believe the cycle is bottoming out. However, the broader market may not be fully convinced yet. They believe a set of upcoming catalysts could reignite market confidence: a dovish RBI, a possible final trade agreement with the US, GST rate rationalization, more capex announcements, acceleration in loans, and improving trade with China. Meanwhile, FPI positioning is at its weakest since 2000. Analysts maintain that India's low-beta nature makes it an outperformer in global bear markets, although it may underperform during global bull runs. Morgan Stanley has a Sensex target of 89,000 in its base case which implies a trailing P/E of 23.5x, ahead of the 25-year average of 21x. 'The premium over the historical average reflects greater confidence in the medium-term growth cycle in India, India's lower beta, a higher terminal growth rate, and a predictable policy environment,' the report said. In this scenario — assigned a 50% probability — Sensex earnings are expected to compound at 16.8% annually through FY2028. This is underpinned by stable domestic growth, benign oil prices, and a positive real growth-real rate gap, as well as monetary easing and continued retail investor participation. Morgan Stanley has Sensex target of 100,000 in its Bull Case scenario, wherein it assigns 30% probability, assuming oil remains below $65 per barrel, global trade tensions ease significantly, and India accelerates reforms. Earnings could grow at a compounded annual rate of 19% through FY2028. In its Bear Case scenario with 20% probability, it Sensex to fall to 70,000, wherein earnings growth would slow to 15% CAGR, and valuations could compress due to macro headwinds. Morgan Stanley is placing its bets on Domestic Cyclicals over Defensives and Exports. It is overweight on Financials, Consumer Discretionary, and Industrials, while underweight on Energy, Materials, Utilities, and Healthcare. 'This is likely to be a stock pickers' market, in contrast to one driven by top-down or macro factors, and thus we run an average active position of just 80 bps. We are capitalization-agnostic,' Morgan Stanley analysts said. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Business Standard
30-05-2025
- Business
- Business Standard
Morgan Stanley sees Sensex at 89,000 by June 2026, upside potential of 8%
The Sensex last traded half a per cent higher at 81,642. A report by the foreign brokerage identified strong fundamentals for domestic equities. "Strong macro stability with improving terms of trade, declining primary deficit, and low-inflation volatility; 2) mid- to high-teens earnings growth annually over the next three to five years, led by an emerging private capex cycle, re-leveraging of corporate balance sheets, and a structural rise in discretionary consumption…,' said Morgan Stanley equity strategists Ridham Desai and Nayant Parekh said in a note. '…3) a reliable source of domestic risk capital; 4) a dovish RBI (Reserve Bank of India); 5) ranged oil prices; 6) two positives from the recent geopolitical event: (i) India has a new doctrine on terror which makes future terror attacks an act of war, a strong deterrent to future terror strikes, also making it easy for future governments to act decisively against terror, unlike the past and, (ii) upside surprise in military performance underscoring strong progress made in strategy, air combat, navigation.' Morgan Stanley cited "technical supportive" factors such as persistent buying by retail investors, low volatility and foreign portfolio investors' weakest positioning since 2000. In terms of portfolio strategy, Morgan Stanley prefers "domestic cyclicals" over *defensive and "external-facing" sectors. It is overweight financials, consumer discretionary, and industrials and underweight energy, materials, utilities and health care. The brokerage acknowledged key risks, saying: "a global recession or near recession would challenge our call. Long-term concerns include capacity constraints in the judiciary, AI's effects on the tech industry, low productivity in the farm sector, and state-level fiscal challenges.
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Business Standard
21-05-2025
- Business
- Business Standard
Morgan Stanley sees Sensex at 89,000 by June 2026, upside potential of 8%
The Sensex last traded half a per cent higher at 81,642. A report by the foreign brokerage identified strong fundamentals for domestic equities. "Strong macro stability with improving terms of trade, declining primary deficit, and low-inflation volatility; 2) mid- to high-teens earnings growth annually over the next three to five years, led by an emerging private capex cycle, re-leveraging of corporate balance sheets, and a structural rise in discretionary consumption…,' said Morgan Stanley equity strategists Ridham Desai and Nayant Parekh said in a note. '…3) a reliable source of domestic risk capital; 4) a dovish RBI (Reserve Bank of India); 5) ranged oil prices; 6) two positives from the recent geopolitical event: (i) India has a new doctrine on terror which makes future terror attacks an act of war, a strong deterrent to future terror strikes, also making it easy for future governments to act decisively against terror, unlike the past and, (ii) upside surprise in military performance underscoring strong progress made in strategy, air combat, navigation.' Morgan Stanley cited "technical supportive" factors such as persistent buying by retail investors, low volatility and foreign portfolio investors' weakest positioning since 2000. In terms of portfolio strategy, Morgan Stanley prefers "domestic cyclicals" over *defensive and "external-facing" sectors. It is overweight financials, consumer discretionary, and industrials and underweight energy, materials, utilities and health care. The brokerage acknowledged key risks, saying: "a global recession or near recession would challenge our call. Long-term concerns include capacity constraints in the judiciary, AI's effects on the tech industry, low productivity in the farm sector, and state-level fiscal challenges."
Mint
21-05-2025
- Business
- Mint
Sensex can hit 1 lakh in a year in bull case, says Morgan Stanley; prefers domestic cyclicals over defensives
The recent correction of the Indian stock market from the September 2024 highs presents a compelling opportunity to invest in India's long-term growth story, according to global brokerage Morgan Stanley. While the firm has revised its base case Sensex target for June 2026, it also predicts the index reaching the 1,00,000 mark under its bull case scenario. In its latest outlook, Morgan Stanley has set Sensex base case target of 89,000 by June 2026, reflecting an 8% upside from current levels. However, under its bull case scenario — which it assigns a 30% probability — the brokerage projects that the Sensex could touch 1 lakh as early as June 2026. 'Our new Sensex June 2026 target of 89,000 (8% upside) bakes in our new earnings estimates and is also rolled forward from the December 2025 target of 82,000,' said Ridham Desai and Nayant Parekh, Equity Strategists at Morgan Stanley. This level suggests that the BSE Sensex would trade at a trailing P/E multiple of 23.5x, ahead of the 25-year average of 21x. The premium over the historical average reflects greater confidence in the medium-term growth cycle in India, India's lower beta, a higher terminal growth rate, and a predictable policy environment, the Morgan Stanley report said. In the base case scenario, where Morgan Stanley sees a 50% likelihood, the brokerage anticipates that the Sensex will reach 89,000 by June 2026. This assumes sustained improvements in India's macroeconomic stability through fiscal consolidation, rising private sector investment, and a positive real growth-real interest rate gap. A stable domestic growth outlook, absence of a US recession, and moderate oil prices are also factored into the forecast. The base case also assumes progress on a favourable India-US trade deal, a 50 basis point cut in short-term interest rates, and an overall positive liquidity environment. Under this scenario, Sensex earnings are expected to grow at a CAGR of 16.8% through FY28. In the bull case, Morgan Stanley envisions a more favourable macro and policy environment, leading to Sensex reaching 1,00,000 by June 2026. Key assumptions include crude oil prices remaining consistently below $65 per barrel, allowing for further monetary easing by the RBI, and a resolution of global trade tensions through reversals in tariff policies. Additionally, unexpected policy reforms—such as GST rate cuts and progress on agricultural reforms—could provide further tailwinds. In this scenario, earnings growth is projected to accelerate to 19% annually over FY25–28. Morgan Stanley assigns a 20% probability to its bear case, in which the Sensex drops to 70,000 by June 2026. This scenario assumes a sharp rise in crude oil prices above $100 per barrel, leading to monetary tightening by the RBI to maintain macroeconomic stability. It also factors in a significant global growth slowdown, including a recession in the US. Under these conditions, earnings growth is expected to moderate to 15% annually through FY28, with a noticeable deceleration in FY26. Equity valuations are also likely to compress in response to deteriorating macro fundamentals. Morgan Stanley maintains a strategic preference for domestic cyclicals over defensives and external-facing sectors, reflecting its confidence in India's resilient domestic growth narrative. The brokerage is overweight on Financials, Consumer Discretionary, and Industrials, while maintaining an underweight stance on Energy, Materials, Utilities, and Healthcare. The report highlights that the current environment is likely to be a 'stock pickers' market', diverging from the macro-driven rallies observed since the onset of the Covid-19 pandemic. Consequently, the firm's average active sector position is limited to just 80 basis points, underscoring a more selective, bottom-up investment approach. Importantly, Morgan Stanley remains 'capitalization-agnostic', suggesting flexibility in identifying opportunities across large-, mid-, and small-cap segments. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
