Soon after Narendra Modi-led BJP's sweeping win in the general elections in May, Morgan Stanley had set BSE Sensex's target for June 2020 at 45,000. This week, the global research firm lowered the target to 40,000.

It has also reduced Sensex's earnings per share (EPS) growth estimate for the current financial year to 13 percent from 19 percent, citing a weaker global backdrop.

"Reflecting a weaker global backdrop as well as growing reflexivity risks from share prices to fundamentals, we cut our earnings estimates for 2020 (FY20) and our Jun-20 index target," Ridham Desai and Sheela Rathi at Morgan Stanley said in a note on Thursday.

The firm's stance is similar to that of other global players. Recently, Nomura cut its March 2020 Nifty target to 11,880 from 12,900, and Citi lowered its Sensex target to 39,000 from 39,600.

Morgan Stanley's Global Emerging Market model portfolio has placed India in a marginal overweight position. It has a bull case of 47,000 if the government takes further positive policy changes and the global growth improves, while a bearish forecast is placed at 31,000, if global recession strikes.

It said that the earnings growth will be better in India in the coming two years than the previous few but the pace of growth will be lower than earlier forecasted.