Indian equity markets may be headed for a strong revival in 2026, with global brokerage Morgan Stanley projecting a sharp upside for the benchmark indices. In its latest India outlook, the firm said that improving foreign investor positioning, strong domestic fund flows, and normalised valuations provide the foundation for a multi-year market rebound.<\/p>\n
Morgan Stanley expects the BSE Sensex to climb significantly over the next two years.<\/p>\n
Bull case: 1,07,000 by December 2026<\/p>\n<\/li>\n
Base case: 95,000 by December 2026<\/p>\n<\/li>\n<\/ul>\n
The brokerage highlighted that the base-case target implies a potential 13 percent upside from current levels.<\/p>\n
According to the note, Indian markets may be entering their strongest phase in years, supported by macroeconomic improvements and a renewed earnings cycle. After a period of sharp underperformance in 2025, Indian equities are positioned for a broad recovery.<\/p>\n
Also Read:<\/strong>Blackstone to Soon Trim Stake in Mphasis, Deal Size Likely Large: CNBC-TV18; Shares Fall 3%<\/a><\/em><\/p>\n Morgan Stanley said India is set to \u201cregain its mojo\u201d in 2026, transitioning from a stock-picking-driven market to a macro-led trade. The brokerage observed that:<\/p>\n Foreign investor positioning is currently \u201cthe lightest in history.\u201d<\/p>\n<\/li>\n Relative valuations have normalised<\/p>\n<\/li>\n Domestic fund flows remain structurally strong<\/p>\n<\/li>\n<\/ul>\n This combination, it said, creates a strong base for a prolonged equity uptrend.<\/p>\n Morgan Stanley identified three pillars that support India\u2019s near-term equity upside:<\/p>\n Earnings Cycle: Policy Pivot: Improving Terms of Trade: The firm said that rising private investment, strengthened bank balance sheets and broad-based nominal GDP growth of 10\u201311 percent will contribute to the earnings expansion.<\/p>\n The report also highlighted that India\u2019s rebound is part of a longer structural reset. According to Morgan Stanley, both inflation and growth volatility have dropped meaningfully, driven by:<\/p>\n Fiscal consolidation<\/p>\n<\/li>\n Flexible inflation targeting<\/p>\n<\/li>\n Macro-stability reforms<\/p>\n<\/li>\n A decline in oil intensity<\/p>\n<\/li>\n<\/ul>\n This shift, it said, is helping push India into a \u201cvirtuous cycle\u201d marked by lower volatility, lower real rates and higher equity valuations.<\/p>\n A key element supporting India\u2019s long-term market trajectory is the structural rise in domestic equity participation. Morgan Stanley noted that this is being fuelled by:<\/p>\n Household financialisation<\/p>\n<\/li>\n Policy changes enabling retirement funds to allocate to equities<\/p>\n<\/li>\n A steadily increasing global index weight for India<\/p>\n<\/li>\n<\/ul>\n These trends, the brokerage said, create a more reliable pool of risk capital and reduce dependence on foreign fund flows, reinforcing the case for sustained market resilience.<\/p>\n Click here to explore: Indian equity markets may be headed for a strong revival in 2026, with global brokerage Morgan Stanley projecting a sharp upside for the benchmark indices. In its latest India outlook, the firm said that improving foreign investor positioning, strong domestic fund flows, and normalised valuations provide the foundation for a multi-year market rebound. Morgan Stanley\u2019s […]<\/p>\n","protected":false},"author":7,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[],"ppma_author":[1384],"class_list":{"0":"post-17619","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news"}," _eael_post_view_count":0,"authors":[{"term_id":1384,"user_id":7,"is_guest":0,"slug":"jitesh-kanwariya","display_name":"Jitesh Kanwariya","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/08\/Jitesh-Kanwriya.jpeg","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/08\/Jitesh-Kanwriya.jpeg"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/17619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=17619"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/17619\/revisions"}],"predecessor-version":[{"id":17625,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/17619\/revisions\/17625"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/17624"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=17619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=17619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=17619"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=17619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Markets to Shift From Stock-Picking to Macro-Driven Trade<\/h2>\n
\n
Three Key Drivers of Near-Term Upside<\/h2>\n
\n
Earnings remain in their middle phase, offering room for sustained growth.
The brokerage expects Sensex earnings to grow 17\u201319% annually through FY28.<\/p>\n<\/li>\n
A decisive shift toward reflation is expected to aid overall economic momentum.<\/p>\n<\/li>\n
Better trade dynamics are likely to support corporate earnings and investment flows.<\/p>\n<\/li>\n<\/ol>\nStructural Reset Underway in the Economy<\/h2>\n
\n
Rise in Domestic Equity Ownership<\/h3>\n
\n
\n<\/strong><\/em>Gift Nifty<\/a>
\nFII DII Data<\/a>
\nIPO<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"