Sensex, Nifty scale new peaks: Are the bulls ready for a fresh burst?

Kolkata: The Indian stock market seems to be bracing for another extended bull run. While the immediate triggers for the new peaks the separate incidents of the possibility of the central banks of the US and India -- the US Fed and the RBI -- slashing the key policy rates in December, major international brokerages such as Morgan Stanley, Goldman Sachs, JP Morgan, HSBC have started factoring in how revenues and earnings can grow in Indian companies.

The tailwinds are quite a few -- policy support (the latest being implementing the long-awaited labour codes), fiscal discipline, rising demand (especially in the rural areas), the indirect tax rejig, renewed interest from Indian companies to loosen their capex purse strings etc. Whether the early indications of a super-cycle in the Indian equity market could be just waiting in the wings, let's have a look at what the brokerages are forecasting.

The most optimistic stance was perhaps from Morgan Stanley. Its report mentioned that Sensex is estimated to reach 107,000 by December 2026 in the bull case scenario. And on a conservative estimate, it could rise to 95,000. Significantly, HSBC has already upgraded India to overweight. All the brokerages have factored in double-digit upside in their calculations.

JP Morgan, too, has set out great optimism by raising its Nifty 50 target to 30,000 by December 2026. It has forecast MSCI India earnings growth of 13% in 2026 and 14% in 2027. JP Morgan has clearly set out the tailwinds -- "With supportive fiscal and monetary policies, recovering domestic demand and broad-based sectoral growth, corporate earnings are set to rebound" it mentioned. All the brokerages are unanimous in their view that if there is a resolution in US-India trade problem will lead to a re-rating in their near term and add momentum to the bull run.

Another prominent name to add to the bull-run forecast is Macquarie. It has said "the balance of risk has tilted favourably with Nifty more likely to end 2026 closer to 30K than 20K levels." It has observed how the GST rejig has paved the way for a revival in consumption, earnings growth premium and perhaps equally important, FII inflow.

There are signs that FIIs, which still hold a significant role in determining the mood and level of the market, have started gradually coming back to the market. The Q2FY26 performance of many Indian companies seem to have restored the confidence in some of them, says analysts. FIIS purchased equities worth Rs 4,778 crore on Nov 26. The valuation concerns are still there somewhat, pointed out JP Morgan but the gap with emerging markets has fallen below the long-term average, it said.

"The technical construct of the market with high FII short position also is favourable for rally. Importantly, the rally has fundamental support from potential earnings growth expected in Q3 and Q4 of FY 26. The consumption boom witnessed in October will translate into impressive earnings growth," chief investment strategist at Geojit Investments, V K Vijayakumar, was quoted in the media as saying.

If interest rates fall as expected 1both in the US and India, there could be a rally in the bond rally and perhaps the rupee can inch up somewhat. Also liquidity levels will rise, helping the recovery. SBI Research has said that RBI should opt for a 25 basis point cut in December to add ammunition to the consumption recovery process.