The Indian stock market is expected to see a strong bounce in the next 12 months, according to Morgan Stanley. The brokerage has a base case target of 95,000 for BSE Sensex, which implies upside potential of 13% through December 2026. This level indicates that Sensex would command a trailing P/E multiple of 23.5x, ahead of the 25-year average of 22x. 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. Advertisement

The brokerage believes that the 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 consi

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