China’s Services Sector Posts Slowest Growth in Five Months as Demand Softens 
Oil Prices Hold Steady as Ukraine Tensions and Fed Cut Expectations Support Market 
Australia’s Economic Growth Slows in Q3 Despite Strong Investment Activity 
Gold Prices Steady as Markets Await Key U.S. Data and Expected Fed Rate Cut 
Asian Currencies Steady as Rupee Hits Record Low Amid Fed Rate Cut Bets 
Asian Markets Mixed as Fed Rate Cut Bets Grow and Japan’s Nikkei Leads Gains 
Oil Prices Rise as Ukraine Targets Russian Energy Infrastructure 
Europe Confronts Rising Competitive Pressure as China Accelerates Export-Led Growth 
Dollar Weakens Ahead of Expected Federal Reserve Rate Cut 
Germany’s Economic Recovery Slows as Trade Tensions and Rising Costs Weigh on Growth 
Gold Prices Edge Higher as Markets Await Key U.S. PCE Inflation Data 
European Oil & Gas Stocks Face 2026 With Cautious Outlook Amid Valuation Pressure 
RBI Cuts Repo Rate to 5.25% as Inflation Cools and Growth Outlook Strengthens 
Asia’s IPO Market Set for Strong Growth as China and India Drive Investor Diversification 
Asian Markets Mixed as RBI Cuts Rates and BOJ Signals Possible Hike 
Asian Markets Stabilize as Wall Street Rebounds and Rate Concerns Ease 
European Stocks Rise as Markets Await Key U.S. Inflation Data 
India’s equity market remains the top choice among emerging economies, with Morgan Stanley forecasting a 14% increase in the Sensex by 2025. Supported by economic stability and strong earnings, the market promises growth amid global uncertainties.
India’s Sensex Targets 14% Growth by 2025, Morgan Stanley Says
According to Morgan Stanley's base case, the benchmark BSE Sensex could see a 14% increase by December 2025, making India's stock market the go-to place for emerging market investors, Investing.com reports.
Despite global growth risks and near-term challenges, India stands out due to its fundamentals, which include strong domestic inflows, stable macroeconomic conditions, and healthy earnings growth.
“With strong earnings, macro stability and domestic flows, it is hard to argue against India's investment case,” according to the analyst.
A stable inflow of non-portfolio foreign currency, a policy that targets inflation with some leeway, and better terms of trade all work to India's advantage.
Macroeconomic Stability and Premium Valuation
Due to these reasons, India's beta to emerging markets is now approximately 0.4, which supports its premium value.
India is poised to take advantage of a private capital investment cycle, deleveraging of corporate balance sheets, and a structural growth in discretionary consumption, with earnings forecast to expand at an annual rate of 18-20% over the next four to five years.
Equity valuations are supported by a steady supply of domestic risk capital, which keeps local demand for equities strong and reduces the impact of external volatility.
Long-Term Growth Fueled by Private Investment
In their base case analysis, Morgan Stanley assumes that government spending cuts would be maintained, private investment will increase, and the real growth-to-interest rate gap will remain favorable.
Expected drivers of Sensex earnings compounding at 17.3% annually until FY27 are stable oil prices, no U.S. recession, and minor interest rate reductions. Even for this time frame, the brokerage's prediction is 15% higher than the consensus.
Since the COVID years, the Indian market has been dominated by macro forces, but now it's shaping up to be a stock pickers' market.
Cyclical Sectors and Small Caps Highlight Strategy
Financials, consumer discretionary, industrials, and technology are cyclicals, thus Morgan Stanley recommends being overweight in those areas and underweight in others.
Investors are putting their faith in domestic economic drivers by favouring small and mid-cap equities over large caps.
