Morgan Stanley anticipates a significant resurgence in Indian stock markets, with equity strategist Ridham Desai highlighting that stock valuations have turned favorable relative to bonds and short-term rates for the first time in nearly five years. The global brokerage has set an ambitious Sensex target of 95,000 by December 2026, representing approximately 13% upside from current levels.

Favorable Valuation Turn After Extended Period

In his latest strategy report, Desai notes that India's trailing 12-month equity performance represents the worst in the country's recorded history on a relative basis. However, this creates a compelling opportunity as valuation metrics approach past trough levels that have historically preceded strong market phases.

Morgan Stanley's analysis indicates that key relative gauges comparing equity valuations with short-term interest rates have "turned up" after several years, implying stocks are now inexpensive versus cash and bonds.

Earnings Growth and Macro Support

The investment bank expects a "sharp turn" in earnings growth, forecasting Sensex earnings to compound at 17% annually through FY28 in the base case scenario. This optimistic outlook is supported by an explicit reflation effort from the Reserve Bank of India and government initiatives.

Multiple macro indicators that historically lead equity returns have swung into positive territory, including bullish yield curve steepening, rising money multiplier, and widening gap between nominal GDP growth and policy rates.

Target Scenarios and Strategic Positioning

Morgan Stanley's December 2026 base-case Sensex target of 95,000 embeds a trailing P/E of 23.50 times, modestly above the 25-year average. The firm has also outlined alternative scenarios based on varying market conditions.

Sector Strategy and Investment Approach

The brokerage recommends focusing on domestic cyclicals over defensives and external-facing sectors. Foreign portfolio investor exposure to India has weakened over the past four years, making the market a potential "pain trade" if global funds rotate back.

Morgan Stanley's composite sentiment indicator, combining flows, volatility, breadth, and momentum, has moved into the buy zone - historically a contrarian signal preceding above-average returns. The structural case for valuation re-rating rests on falling oil intensity in GDP, rising export share in services, and ongoing fiscal consolidation supporting lower real rates and reduced macro volatility.

Morgan Stanley has filed with the U.S. Securities and Exchange Commission to launch exchange-traded funds tied to bitcoin and solana cryptocurrencies, becoming the first major U.S. bank to seek approval for such products. The Tuesday filings mark the firm's first foray into the popular crypto ETF space, two years after the explosion of cryptocurrency-focused funds brought them into mainstream investment portfolios.

Filing Details and Product Structure

The bank submitted paperwork for a Bitcoin Trust and a Solana Trust, each designed to hold the individual cryptocurrencies directly. The Solana product includes a unique feature where a portion of holdings would be staked, allowing investors to earn rewards by supporting the blockchain network through their token ownership.

Market Size and Opportunity

The cryptocurrency ETF market has reached significant scale, with more than $150.00 billion already invested across approximately 130 U.S. funds, according to Bloomberg data. Much of this investment flows into Bitcoin-specific products, many of which launched in January with immediate success. More than 10 pure Bitcoin-focused funds currently trade in the U.S., alongside various Solana-based products targeting the sixth-largest digital currency by market value.

Wall Street's Growing Crypto Embrace

Morgan Stanley's filing reflects a broader trend of traditional financial institutions deepening their digital asset involvement. Major firms including Goldman Sachs Group, JPMorgan Chase, and Citigroup have expanded institutional crypto efforts, rolling out trading operations and piloting custody, settlement, and tokenization initiatives.

"Crypto is becoming too big to miss for issuers, especially those who have in-house advisers," said Todd Sohn, a senior ETF strategist at Strategas Securities. "This is yet another milestone embracement similar to Vanguard allowing crypto ETF trading and BofA allowing for a small allocation."

Current Market Performance

Latest cryptocurrency market data shows mixed performance across major tokens:

Strategic Positioning

Morgan Stanley currently does not rank among the top-10 ETF issuers and commands fewer assets in the space than newer entrants like Neos Investments. The bank's existing fund offerings largely focus on fixed income and equities, making this crypto filing a significant strategic expansion. The firm has shown increased interest in cryptocurrency, including partnerships with infrastructure providers for E*Trade client trading and plans for crypto asset-allocation strategies.