Morgan Stanley Lowers India’s FY26 Outlook

Global brokerage firm Morgan Stanley has revised its year-end Sensex target downward to 82,000 (from the earlier 93,000), and trimmed India’s FY26 GDP growth estimate to 6.1%, in response to high tariffs imposed by the United States under President Donald Trump. The global economic uncertainties triggered by these tariffs have adversely impacted investor sentiment and market outlooks worldwide, including in India.

Key Highlights

Sensex Target Revised

• Morgan Stanley cut its year-end Sensex target to 82,000, a 9% upside from current levels.
• The previous target was 93,000.
• The downgrade is linked to fears of a global economic slowdown due to new US tariffs.

Reason: US Tariffs Impact

• On April 2, 2025, President Trump introduced new tariffs on 70 trading partners, calling it “Liberation Day”.
• India faced a 26% additional tariff, though lower than China, Vietnam, and South Korea.
• These protectionist measures escalated global trade tensions and market volatility.

GDP Growth Forecasts Lowered

• Morgan Stanley lowered India’s FY26 GDP growth estimate by 40 bps, from 6.5% to 6.1%.
• RBI also reduced its projection from 6.7% to 6.5% in its April 9 Monetary Policy Committee (MPC) announcement.

Other brokerages revised estimates,

• UBS: from 6.3% → 6.0% (25 bps cut)
• Goldman Sachs: revised to 6.1%
• Citi: 40 bps impact expected
• QuantEco Research: 30 bps impact
• HSBC/UBS Securities: project 20–50 bps drag

Sector-wise Stance by Morgan Stanley

Overweight on,

• Financials
• Consumer cyclicals
• Industrials

Underweight on

• Energy
• Materials
• Utilities
• Healthcare