Sensex To Crash To 63000 By December, Morgan Stanley’s Worst Case Scenario

Morgan Stanley in its 'India Economics and Strategy' said that the BSE Sensex in the worst case scenario could crash to 63,000 points.

The BSE Sensex has a target of 82,000 points (down from 93,000) and this implies an upside potential of 9% to December 2025.

"This level suggests that the BSE Sensex would trade at a trailing P/E multiple of 23x, ahead of the 25-year average of 21x. The premium over the historical
average reflects greater confidence in the medium-term growth cycle in India, India's lower beta, a higher terminal growth rate, and a predictable policy environment," the report noted.

BSE Sensex: Bear Case Scenario

According to the report, the BSE Sensex could crash to 63,000 points in the worst case scenario.

This is because oil prices have surged beyond $100 per barrel and as a result the Reserve Bank of India (RBI) has ended up tightening to protect micro stability, global growth slows meaningfully, and notably the US is also slipping into recession, the Morgan Stanley report stated.

Additionally, the report predicts that Sensex earnings will compound at 13% annually over F2025-28 with perceptibly lower growth in F2026 and equity multiples de-rate to reflect poor macro conditions, in the bear case.

BSE Sensex: Bull Case Scenario

Since oil prices are persistently below the $70s in the bull case scenario, the Morgan Stanley report notes that they are also resulting in lower domestic inflation and prompting more rate cuts from the RBI.

Additionally, the global trade war is projected to be curtailed by reversals in positions on tariffs, leading to improved growth prospects.

In the best case scenario, Morgan Stanley also predicts the earnings growth to compound at 18% annually over F2025-28, while government reforms surprise the upside with a slew of GST rate cuts and some progress on farm laws.

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