The Indian equity market has witnessed a sharp sell-off in recent months, experiencing deep cuts from record highs reached in September 2024. As of 12 March 2025, the benchmark Sensex index is hovering just above 73,000. However, global brokerage firm Morgan Stanley expects the picture to change by year-end.
“Stock Pickers’ Market”
In a report co-authored by Ridham Desai, Morgan Stanley’s Head of India Research, along with Upasana Chachra, Sheela Rathi, Nayant Parekh, and Bani Gambhir, the firm stated that it believes the Indian stock market is oversold, calling India a “stock pickers’ market.”
Sensex: Base, Bull & Bear Cases
The report outlined multiple scenarios for the road ahead for Indian equities. In the base-case scenario, the analysts expect the Sensex to rise more than 25% to 93,000 by the end of the year. In a bull-case scenario, they predict a year-end target of 1,05,000—a gain of over 40% from current levels. However, in the worst-case scenario, they foresee a decline of nearly 6% from present levels.
Sensex Call: The Rationale
Explaining their rationale, the Morgan Stanley team noted that Indian equities were in oversold territory. They also highlighted that stock valuations are currently “the most attractive” since the Covid-19 period.
Sectors In Spotlight
The authors added that they remain bullish on cyclicals, defensives, small-caps, mid-caps, and large-cap stocks. They also maintain an overweight rating on financials, consumer discretionary, industrials, and technology sectors.
Morgan Stanley’s Top Stock Picks
Morgan Stanley’s top stock picks include Jubilant FoodWorks, Mahindra & Mahindra (M&M), Maruti Suzuki India, Trent, Bajaj Finance, ICICI Bank, Titan Company, Larsen & Toubro (L&T), Ultratech Cement, and Infosys.
The Morgan Stanley report also emphasised the external risks, including geopolitical tensions, global trade wars, and the impact of Donald Trump’s tariff actions on emerging markets. While India’s economic fundamentals remain strong, factors such as inflation trends and US Fed interest rate decisions could impact investor sentiment.
Despite these risks, Morgan Stanley believes that India is on track to become one of the world’s “most sought-after investment destinations”, thanks to rising consumption, a strong manufacturing push, and favourable macroeconomic policies. If market conditions stabilise, the brokerage expects a strong rally in the second half of 2025.
