“The bullish trend in the market is likely to be sustained aided by positive triggers. At the fundamental level the picture of ‘strong macros but weak micros’ at the beginning of the year is changing to ‘ strong macros and improving micros’. This fundamental support is aided by the change in perception towards India by leading global banks who now consider India fairly valued and buyable in the context of a resilient economy and improving corporate earnings. The weakening AI trade is another positive for India which can be regarded as an anti-AI trade. FIIs turning buyers in the cash market yesterday is a reflection of this changing perception towards India,” V K Vijayakumar, Chief Investment Strategist at Geojit Investments said.
In a recent report, global investment firm Morgan Stanley highlighted multiple pathways for the market, mainly attributing the optimistic projections to India’s anticipated policy pivot.
“Following their worst underperformance in three decades, we see Indian equities regaining their mojo in 2026. Policy has pivoted, supporting a strong recovery in nominal growth, which should take earnings growth out of the mid-cycle slowdown experienced over the past 12 months. Relative valuations are consistent with improved forward performance. FPI exposure remains the lightest in history,” Ridham Desai Desai and Nayant Parekh from Morgan Stanley said, adding that Indian equities appear set to reverse their worst performance relative to emerging markets in 31 calendar years.
Morgan Stanley has set the Sensex bull case target at 107,000 by December 2026, projecting the benchmark index to surge by nearly 26% from current levels if macroeconomic and policy tailwinds remain favourable.
Global brokerage Goldman Sachs struck a similar tone last week when it upgraded India to Overweight and projected the Nifty to reach 29,000 by December 2026, an upside of about 11% from current levels. The firm said Indian equities, which lagged global peers through 2024, are now setting up for a reversal, backed by firmer policy support, improving profit trends and easing macro pressures.According to Goldman Sachs, potential RBI actions such as rate cuts, better liquidity, bank deregulation, along with GST tweaks and a slower pace of fiscal consolidation, should help drive a broad-based rebound over the next two years.The brokerage also noted that India’s prolonged earnings downgrade phase seems to have run its course, with recent quarters outperforming expectations. It now expects MSCI India’s earnings growth to improve from 10% this year to 14% next year, aided by stronger nominal growth and continued corporate cost efficiencies.
In today’s session, the frontline indices mirrored positive global cues after Nvidia, the most valued company in the world, reported a robust set of numbers for the fourth quarter, easing fears of an AI bubble. As a result, Wall Street ended the session strong, triggering a sharp surge across Asia, where equities gained over a percent.
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