The Indian stock market remained in decline for the fourth consecutive day amid the attacks on Iran by America and Israel. Meanwhile, global brokerage firm Morgan Stanley has said that BSE Sensex is at its cheapest level compared to gold. According to the report, in the bull case (extremely positive situation), the Sensex can reach the level of 1,07,000 by December 2026.
distance between market and economy
Morgan Stanley strategist Ridham Desai said that at present there is a distance between the market and the macro economy. He believes that this gap is providing an opportunity to buy good quality Indian shares. The report said that despite strong earnings and better economic performance, the performance of the Indian market in the last 12 months has been the weakest in history.
What is the reason for the decline?
According to the brokerage, the pressure on the market is not due to domestic weakness, but due to foreign fund outflow, hedge fund positioning and global risk aversion. One important thing that has also been said in the report is that if we look at the ounce of gold, the Sensex is at its cheapest level till date.
Estimates range from 95,000 to 1,07,000
Morgan Stanley has set the Sensex target at 95,000 by December 2026 in the base case, which is about 18% above the current level. In the bull case, the target is 1,07,000, i.e. a possible gain of up to 33%. This estimate is based on the premise that the price of crude oil remains below $60 per barrel, India’s policies work, global trade tensions reduce and companies’ earnings grow at the rate of about 19% every year till 2028.
macro signals strong
According to the report, policy uncertainty is decreasing, capital spending is increasing and nominal economic growth may remain faster than interest rates. Possible RBI rate cut, relaxation in the banking sector, steps to increase liquidity and government incentives can support the market. Overall, Morgan Stanley believes that the current uncomfortable environment is temporary and this decline can become an investment opportunity in strong companies.