Good days are about to come for Indian markets. Re-rating of Indian market is going to happen soon. Morgan Stanley has said this in its new report. This is good news for stock investors. The year 2025 disappointed the stock investors. Even though the returns of Sensex and Nifty were around 10 percent last year, most investors did not make profits on their investments.
Stock market will gain momentum due to these reasons
On February 6, Morgan Stanley’s equity strategists Riddham Desai and Nayant Parekh explained the reasons due to which Indian markets may rise. He says that RBI policy is going to promote growth. The central bank has reduced interest rates. The independence of banks has increased. Measures have been taken to increase liquidity in the banking system. The government’s focus continues to be on capital expenditure. There was a big cut in GST rates last year. Growth enhancing measures have been announced in the Union Budget. This will boost Indian markets.
There will be improvement in earnings growth in the coming months
Desai and Parekh believe that earnings growth may also increase significantly in the coming months. Earnings growth has been a big headache for Indian markets. Despite increase in consumption, earnings growth of companies has not increased much. “The trade deal and improving relations with China will also have a positive impact on stock markets,” Morgan Stanley’s report said. Earlier this week, America announced to reduce tariffs on India. A trade deal is also going to be signed between the two countries in March.
Performance of stock markets has been very poor in the last 12 months
Morgan Stanley analysts have said that many positive things are visible simultaneously with the shares of Indian companies. These include low relative valuations, weak trailing performance, growth-promoting policies and currency weakness. There are also chances of a new buyback cycle starting. This report states that the performance of the Indian stock markets in the last 12 months was the worst in history.
Government’s focus on reforms will support the market
In this report, four reasons have been given for the possible rise in the Indian market. The first of these is an indication of improvement in the earnings growth of companies. Second is RBI’s policy to promote growth and liquidity. Third, there is a government policy to promote reforms. The government’s focus on privatization is expected to increase in the coming times. Lastly there is the buying by foreign investors. Selling by foreign investors has been going on for the last several months. Buying by foreign investors may resume once earnings growth increases.
Possible targets for stock market till December
Morgan Stanley has said that in a bull case, the Sensex can go up to 1,07,000 points by December 2026. In the base case it can go up to 95,000 by December. In the bear case, it can go up to 76,000 by the end of this year. On February 6, there was a lot of volatility in Sensex and Nifty. The markets which opened weak in the morning turned green in the afternoon. Sensex closed 266 points higher at 83,580, while Nifty closed 51 points higher at 25,693.