Morgan Stanley is optimistic about India’s market outlook, expecting the Nifty index to recover and outperform other emerging markets in 2025, given stable global conditions. According to the firm, the recent market correction in India is largely behind, and the country is poised to be one of the top performers among emerging markets in the coming years.
The investment firm highlights India’s strong macroeconomic stability as a key factor, with forecasted earnings growth of 18-20% annually over the next four to five years. In addition, robust domestic capital inflows and potential government reforms, fiscal policies, and a dovish Reserve Bank of India (RBI) are expected to act as positive catalysts for growth.
Morgan Stanley believes that India’s recent soft growth phase is coming to an end. If global conditions do not worsen, the country is likely to resume its outperformance among emerging markets. The firm predicts a 19% upside in the BSE Sensex by December 2025, provided domestic growth remains stable, the U.S. avoids a recession, and oil prices remain moderate.
The firm is favoring cyclical stocks over defensive ones, and believes that small and mid-cap stocks will outperform large-cap stocks. Its recommended sectors include financials, consumer discretionary, industrials, and technology, with an overweight position in these areas.
