Morgan Stanley has released its India Outlook for 2026, projecting a steady macro-driven year for equities while reiterating that the long-term investment story for India continues to gain strength. The brokerage said government policy action remains a key structural tailwind, with most of the potential risks now originating outside India rather than domestically.

For the benchmark indices, Morgan Stanley has set a base-case Sensex target of 95,000 for end-2026implying an upside potential of around 13% from current levels and assigning it a 50% probability. In a more optimistic scenario, the bull-case target stands at 1,07,000 (30% probability), while the bear-case estimate is 76,000 (20% probability), factoring in global volatility, geopolitical risks and external macro shocks.

The brokerage expects 2026 to be a year where macro trends dominate equity performancerather than narrow, sector-specific triggers.

On sector preferences, Morgan Stanley said consumer discretionary is well positioned as urban demand recovers, supported further by proposed GST cuts. The industrials sector remains an overweight call, backed by sustained government capex and early signs of a revival in private sector investment. In financialsrising credit growth and benign credit costs remain positives, although the firm expects some offset from NIM compression. It added that deregulation moves could be structurally positive for the banking industry.

Disclaimer: The views above are those of Morgan Stanley. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.