Strong macroeconomic stability, fiscal discipline, and robust private investments to drive India’s equity market growth.
New Delhi, January 6: A recent Morgan Stanley report projects an impressive 18% gain in the BSE Sensex by December 2025, driven by macroeconomic stability, fiscal consolidation, and increased private investments.
The report highlights India’s ability to maintain a positive gap between real economic growth and real interest rates, ensuring continued domestic growth.
Key Drivers Behind the Projection
According to Morgan Stanley, the following factors will play a crucial role in driving India’s equity market growth:
- Stable Macroeconomic Environment: Fiscal discipline and macro stability are expected to remain intact.
- No US Recession: A steady global economic environment without a US recession will support India’s growth momentum.
- Benign Oil Prices: Stable crude oil prices will prevent inflationary pressures.
- Interest Rate Trends: A modest reduction in interest rates is anticipated, contributing to positive liquidity conditions.
- Retail Participation: Strong retail investor participation is expected to outpace bond supply, maintaining liquidity.
“Robust domestic growth, no recession in the US, and benign oil prices are also part of our assumptions,” the report stated.
Optimistic Corporate Earnings Outlook
The report predicts Sensex earnings to grow at an annual rate of 17.3% through FY2027. Morgan Stanley’s projections are 15% higher than market consensus estimates, reflecting strong confidence in India’s corporate sector resilience and sustained economic momentum.
India’s Strong Investment Case
The report underscores India’s attractiveness as an investment destination, emphasizing:
- Strong corporate earnings growth
- Continued macroeconomic stability
- Favourable policy environment
“With strong earnings, macro stability, and domestic flows, it is hard to argue against India’s investment case,” Morgan Stanley noted.
A Promising Investment Horizon
If the outlined assumptions hold—stable oil prices, a non-recessionary US economy, and sustained domestic growth—investors in the Indian equity market could witness significant returns by the end of 2025.
The report reinforces India’s standing as a resilient and attractive investment hub, poised to deliver robust economic and market performance in the coming years.
