Morgan Stanley ups September 2019 BSE Sensex target by 17% to 42,000

If investors start expecting that the electorate will deliver a fragmented verdict with weak leadership, the index will likely head towards their bear case scenario of 33,000 levels

Morgan Stanley has upped its September 2019 target for the S&P BSE Sensex by around 17 per cent to 42,000 (up 12 per cent from Tuesday’s levels) from its earlier forecast of 36,000 by June 2019. It also maintains a bullish stance on small-and mid-caps (SMIDs) and suggests investors can start to cherry pick from these two market segments as well.

“On our target, the Sensex would trade at a forward PE of 16.5x (compared to 18x currently) and trailing price – to – earnings (PE) of 20x, higher than the 25-year trailing average of 19x. We think SMID indices look