Oil Prices Hold Steady Amid Middle East Escalation and Sanctions Relief 
Asian Markets Mixed as Oil Volatility and Inflation Fears Weigh on Sentiment 
Iran Threatens Gulf Infrastructure as U.S.-Israel War Enters Critical 48-Hour Window 
Trump Signals End of U.S. Military Campaign Against Iran as Markets Rally 
Federal Reserve Crisis: DOJ Standoff Threatens Powell's Succession and Rate Stability 
Iran-Israel War Escalates: Long-Range Missiles, Nuclear Site Strikes, and Global Energy Crisis 
Trump Issues 48-Hour Ultimatum to Iran Over Strait of Hormuz, Threatens Power Grid Strikes 
US-Iran War: Trump Eyes Military Exit as Markets React to Potential De-escalation 
Gold Prices Drop Amid Inflation Fears and U.S.-Iran Escalation 
Asian Currencies Slide as U.S.-Iran Tensions and Rising Oil Prices Rattle Markets 
U.S. Markets Post Fourth Straight Weekly Loss Amid Middle East Escalation 
Gold Prices Extend Losing Streak, On Track for Worst Weekly Loss Since 1983 
South Korean Stocks Tumble as Hawkish BOK Governor Appointment Rattles Markets 
Iran-U.S. War Sends Dollar Higher as Middle East Tensions Escalate 
Japan Eyes Reduction in Inflation-Linked Bond Buybacks Amid Surging Investor Demand 
Global Markets Tumble as US-Iran Tensions Escalate, Oil Surges 
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.
