Last Updated on February 6, 2026 11:45 pm by BIZNAMA NEWS
The Indian benchmark indices closed Friday on a positive note, with the Sensex rising 266 points to 83,580 and the Nifty gaining 0.20% to settle at 25,693. This capped off a rollercoaster week where markets successfully navigated the “STT shock” from the Budget and a massive IT sell-off, eventually finding support in a landmark trade deal with the US. The Reserve Bank of India’s decision to maintain the repo rate at 5.25% provided the necessary stability, while its upgraded GDP forecast of 7% for Q2FY27 signaled strong underlying economic momentum. Consequently, the Nifty recorded its best weekly gain since last November, rising 1.47% despite global headwinds.
Sectoral Divide: FMCG Triumphs as IT Bleeds Performance was starkly split across sectors, with the Nifty FMCG index emerging as the top gainer, surging 2.2% led by heavyweights like ITC and HUL. Conversely, the IT sector faced a brutal week, losing ₹2.4 lakh crore in market capitalization as the Nifty IT index fell another 1.47% on Friday due to AI-related growth concerns. While blue-chip gainers like Kotak Bank and Bharti Airtel helped lift the indices, the broader midcap and smallcap segments saw minor profit-booking. Looking ahead, analysts at Morgan Stanley remain bullish, projecting a “growth upcycle” that could propel the Sensex toward the 95,000 mark by year-end, supported by a structural shift in Indian household savings toward equities.
Morgan Stanley’s projection for the Sensex to hit 95,000 by December 2026 (with a “bull case” of 107,000) is based on what they call a “rare combination” of factors. Essentially, they believe that after a period of relative underperformance in 2025, India is entering a “Goldilocks Environment”—a sweet spot of high growth and low volatility.
The firm identified four specific “pillars” for this bullish outlook:
1. The “Re-Rating” Opportunity
Morgan Stanley notes that Indian stocks have recently seen their worst trailing 12-month performance in history relative to global peers. This has made valuations “inexpensive” for the first time in years. They expect a massive “pain trade” where global investors, who are currently at record-low exposure to India, will be forced to buy back into the market as it rallies, further driving up prices.
2. A Policy Shift Toward “Reflation”
Both the government and the RBI have pivoted from the post-COVID “hawkish” (restrictive) stance to one that supports growth.
- The RBI: Following recent rate cuts and the current pause, the focus has shifted to maintaining liquidity and loan growth.
- The Government: The February 2026 Budget maintained a heavy focus on capital expenditure (3.1% of GDP) and introduced nearly ₹1.5 trillion in GST cuts to boost mass consumption.
3. Structural Economic Strengths
India is becoming less vulnerable to external shocks. The “oil intensity” of India’s GDP is falling, and the share of services exports is rising, which stabilizes the currency. Additionally, household financialization is at an all-time high—more Indian families are moving their savings out of gold and real estate and into the stock market (SIPs), providing a steady “bid” that supports stock prices.
4. New Growth Catalysts
The firm highlighted that corporate earnings are expected to grow by 17–19% annually through FY28. Key new drivers include:
- Trade Deals: Landmark trade agreements (like the recent deal with the US) and a “thawing” of trade relations with China.
- Buyback Cycle: New tax regimes are making it more attractive for companies to buy back their own shares, which reduces supply and increases the value of remaining shares.
- Future Sectors: Massive government pushes into semiconductors, data centers, and AI are expected to create a new “growth upcycle.”
