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Ramdev ji, should we expect from the budget that this growth story will now be in the form of consumption, it will push the economy to 7 or 7 or 1/2 kind of ense that come, so clear it, even at little cost, it will push the growth. Now, for that, I think, apart from fiscal, the biggest thing right now is has almost reduced in the economy, from 15 to 10, I think that will be understood in the next month or 15, which or 10, then I do not think that there will be disappointment in the entire growth, so wait a minute, Ramdev sir, you feel that RBI can cut the rates, not in this policy, I feel that monetary policy will follow.
Your e of 25-26 percent has a good chance of coming. Okay, Prashant ji, will a rate cut in this policy be too much for the market because just last Monday, RBI had announced liquidity measures? What should we expect? Can a rate cut also come in the policies? Look, it is very difficult to say and I don't actually believe it, if I say the truth, I put a lot of thought into all these matters.
RBI knows best about this issue and take it as it is. Our team believes that the chances of a policy decision coming in this meeting are low, but as I said, I have not put much thought into it. So, now, okay, the chances of it coming are low right now. Let's go back to Madhu ji. Madhu ji, then looking at the budget, are you planning to take a look at your portfolio?
You would like to make changes in your portfolio. You will have to make sure of this because the market was mainly running on capex and investment. Right now consumption was there because FMCG and these companies were underperforming for the last two years. So I think whatever has happened in the budget will definitely give a leg up to consumers and some changes will have to be made in the portfolio to include consumer stocks more forward.
Well Sunil ji, although you talk a little less about the near term. You are a long term investor, but our viewers would like to know whether a durable bottom has been formed in the market after the budget. This is the rule of the market that the market has this phase where there is a little overvaluation and a little undervaluation.
There is a phase in which a lot of returns are made and there is a phase in which a little pain has to be seen. I think in the last two-three years the markets were in a very good mood. I would say that in many places there was a movement in price more than the valuation. And what we have seen from last June-July till now, the peak was formed last September, but in the six months from June-July till today, there were many challenges and the pre-dominant challenge was that the growth of both GDP and corporate profits slowed down a lot and the shares were not cheap, due to which you saw correction.
I think correction is necessary in between, a little reality check is also done. I speak today, I do not think that the market is going to go down much, but at the same time the valuation is better than before, but the prices have still not completely recovered. This year is going to be a bit challenging and if we feel that if we can make even low double digit returns this year, then it will be a great year and I think this budget has made it a little more concrete.
It seems that low double digit returns can be made this year as well, but if you expect more than that, then we will have to have many more positives. We will have to come. Prashant ji, what will be your view on low double digit returns? For this also, now in the next 11 months, we will have to earn at least 11% because if you look at Nifty till now this year, it is almost at -7% and Mit Cup this year is actually -6.5%.
I agree with Sunil here, I feel that by the next budget, Sensex which is 85000 should be around 10-12% and Nifty which is 26% again. Similar return of 10-12% is also to be expected and obviously you know there is nothing earth shaking in the budget which will accelerate near term earnings but there is nothing negative, so this 10-12% growth in returns will be in line with what we expect corporate earnings growth over the next 10-12 months.
Prashant ji, another question which is now increasing the concern of investors is the relative selling of FIs, although it has to be accepted that this selling is not India specific, it is in the emerging market. It is happening and to a large extent, if they are making money in the US in bond yields and the way the dollar is moving, then they do not want to take the risk of the emerging market.
But are there any chances of FIIs coming back this year? Look, in the last three-four months there has been a massive increase in FII outflow due to two reasons. One, in October, there was a 35% jump in China. Most emerging market investors and global investors were very underweight in China. And when there is such a 35% jump and people are underweight.
Like Madhu ji said just now that there is consumption in India, then their attention will go more there because right now it is up two-three times today and consumption is flat. Similarly, if there is a 35% jump in a big market like China, then the interest is also understandable. It is understandable that fund managers and investors will invest more in China and for that they will withdraw money from everywhere else.
Therefore, there was withdrawal from India in October-November. Now, what is coming in January, according to us, mainly Because after Trump's arrival, everyone has to increase their exposure in the US. Even if it is less than the benchmark, then it has to be made equal. If it is equal, then it has to be overweighted.
And US is 70% of the global market cap, so if you increase it by 2.5%, then that is a massive increase and you have to take it out from the remaining 30% bucket. So, if you take out the last 5% from the 30% bucket, then 20% becomes an outflow on the base of 30%. Due to that, I think across the board, there have been a lot of outflows from emerging markets as well and due to that, when will the outflow from India also stop?
It will stop sometime or the other. This rotation that you can say is going on into the US right now, you know, it may get smoothened out in the next few days, it may reduce and then there will be normal market activity. Sometimes some day will be positive and sometimes negative. Yes, today in the last month, almost continuously every single day the FII numbers are coming negative because of the US, according to me.
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