Indian markets likely to rise in Q3 FY26, Morgan Stanley

Indian stock markets are more likely to rise than fall in the third quarter of the financial year 2026 (Q3 FY26), Morgan Stanley said in a note on Friday.

The global brokerage remains bullish on Indian equities, expecting strong growth data, supportive moves by the Reserve Bank of India (RBI), and better-than-expected corporate earnings to push the market higher from July onwards.

According to the firm, India is showing signs of steady



improvement. Government spending is increasing, and the RBI appears to be moving towards a more supportive or ‘dovish’ policy stance.

This, combined with easing inflation, is creating a good environment for the stock market.

The brokerage also believes that lower interest rates will help banks lend more, boosting lending growth.

In addition, if global uncertainties reduce, Indian companies may begin to invest more in new projects.