Morgan Stanley slashes Sensex target to 82,000

Synopsis

The brokerage cut its Gross Domestic Product (GDP) growth estimates by 40 basis points to 6.1% and expects a slower recovery of 6.3% in FY27, against its earlier forecast of 6.5%.

Mumbai: Morgan Stanley has slashed its target on the Sensex for December to 82,000 from 93,000, citing lower economic and corporate earnings growth estimates. The new price target implies an upside of 6.9% over Tuesday's closing level of 76,735.

The brokerage cut its Gross Domestic Product (GDP) growth estimates by 40 basis points to 6.1% and expects a slower recovery of 6.3% in FY27, against its earlier forecast of 6.5%.

"This reflects uncertainty stemming from changes in trade and tariff policies which weigh on external demand and business sentiment, hampering the capex cycle," said Morgan Stanley in a client note.

The brokerage is overweight on financials, consumer cyclicals, and industrials, while underweight on energy, materials, utilities and healthcare.

Agencies

Morgan Stanley said India's correlation of returns with global equities continues to decline and is lower than historical levels.

"Weak global markets cap absolute returns, whereas a global bull market could coincide with relative underperformance for a low-beta market like India," said the brokerage. "Thus, India is significantly outperforming the current global selloff even while the index could reach multi-month lows."

Morgan Stanley said it has cut growth forecasts because of the US policy on tariffs, the prospects of China's retaliation, and the accompanying uncertainty.

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