Morgan Stanley Anticipates 18% Growth for Sensex by End of 2025
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Mumbai, Jan 6 (NationPress) Morgan Stanley foresees India becoming one of the top-performing emerging markets by 2025, projecting an 18% increase in the Sensex by the end of December.
In its most recent report, the US-based investment bank anticipates an 18% upside for the BSE Sensex by the end of December.
India's macroeconomic stability remains robust, bolstered by favorable trade conditions and adaptable inflation targets, according to the global brokerage, which forecasts earnings growth of 18-20% over the next four to five years.
Factors contributing to this growth include a cycle of private capital expenditure, the re-leveraging of corporate balance sheets, and a structural increase in discretionary consumption. Additionally, a dependable source of domestic risk capital enhances capital expenditure.
Key areas such as infrastructure spending, restructuring of GST rates, reforms in direct taxes, new free trade agreements, and a focus on energy transition will further bolster India's macroeconomic stability, as highlighted by Morgan Stanley in its report.
On the topic of interest rates, Morgan Stanley projects a mild cycle of 50 basis points, with expected rate cuts beginning in February. The bank anticipates two consecutive cuts of 25 basis points each.
The Reserve Bank of India (RBI) is now focused on maintaining durable liquidity, and regulatory tightening may ease in the upcoming weeks, according to the brokerage. Initial issuance in Indian markets currently stands at approximately 1.3% of GDP, compared to a previous peak exceeding 3.5%, and is projected to rise further, as noted by Morgan Stanley.
The base estimate also includes strong domestic growth, the absence of a recession in the US, and stable oil prices. "We incorporate a modest decline in interest rates and a favorable liquidity environment as our baseline for monetary policy. We do not foresee a concentration of issuances, and retail bids are expected to maintain their lead over supply," Morgan Stanley stated.
