Can the BSE Sensex hit 100,000 in a year? Here is what Morgan Stanley says
The Sensex and Nifty have rebounded in the last few weeks, reducing some of the losses the indices had seen since hitting a peak back in September 2024. So far in 2025, the BSE Sensex is up around 4 per cent.
Can The Sensex hit 100,000? According to Morgan Stanley, there is a 30 per cent probability of a bull case where the landmark is hit by June 2026.
But, there are too many ifs and buts for that. More realistically, the investment bank projects the 30-share benchmark large-cap index will be at 89,000 by June 2026, meaning a more modest 8 per cent upside from current levels.
"This level suggests that the BSE Sensex would trade at a trailing P/E multiple of 23.5 times, ahead of the 25-year average of 21 times. 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," said Ridham Desai, India equity strategist at Morgan Stanley.
He pointed out that India's fundamentals remain strong. Macro is stable, primary deficit is declining and inflation volatility is low. Notably, earnings are seen to grow in the mid-to-high teens annually over the next 3-5 years, led by an emerging private capex cycle, re-leveraging of corporate balance sheets, and a structural rise in discretionary consumption. The Reserve Bank, too, is expected to remain dovish, with more interest rate cuts expected and oil prices are likely to be range-bound. Also, domestic risk capital is now a reliable source.
"Despite all the events of the past two months, Indian stocks remained orderly... Persistent retail buying underpins its structural nature. Foreign portfolio positioning is the weakest since we have had the data in 2000 and there are signs that their view on India is shifting," said Desai.
Morgan Stanley's base case assumes domestic growth will remain robust, while growth in the US will slow down, but there will not be any recession. There is also an expectation of another 50 bps cut in short-term interest rates. Sensex earnings are seen to compound 16.8 per cent annually through the financial year 2028. It also assumes a benign India-US trade deal.
What will it take for the Sensex to hit 100,000?
"In addition to the above, oil prices are persistently below $65 a barrel, resulting in better terms of trade and prompting more rate cuts from the RBI. The global trade war is curtailed by complete reversals in positions on tariffs, leading to improved growth prospects," said Desai.
Importantly, this bull case calls for government reforms surprising on the upside, with a slew of GST rate cuts and some progress on farm laws. Also, earnings would have to compound 19 per cent annually.
On the reverse, should oil prices surge again above $100 a barrel, RBI, rather than cutting rates, ends up tightening monetary policy to protect macro stability, global growth slows meaningfully, with the US economy slipping into a recession, and Sensex earnings also compound at a slower 15 per cent annually, the Sensex could also slump to 70,000, which is a 13.7 per cent downside. But, Morgan Stanley only sees a 20 per cent probability for that to play out.
From a portfolio perspective, the investment bank is overweight on financial companies, consumer discretionary and industrials, while it is 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 since the Covid pandemic," said Desai.
Business