Business confidence of India Inc for October-December quarter dropped to the lowest level in four-and-a-half years amid economic uncertainty in the global and domestic markets, Dun & Bradstreet said in a report.
The Dun & Bradstreet Composite Business Optimism Index for the fourth quarter of 2013 stood at at an 18 quarter low of 134.9, a decrease of 4.2 per cent as compared to the same period last year.
Five out of the six optimism indices, namely volume of sales, new orders, net profits, inventory levels and employees have registered a decrease as compared to Q4 2012. The other index selling prices increased.
The Composite Business Optimism Index is calculated by assigning weights to each of the six parameters. The parameter weights are then applied to these ratios and the results aggregated to arrive at the index.
"India Inc continues to be cautious in their outlook as they expect little change in business conditions as compared to the previous quarter," Dun & Bradstreet India President and CEO Kaushal Sampat said.
He further noted that "while a number of domestic factors including weak industrial growth, weak FII inflows, slow progress in project clearances and regulatory hurdles continue to destabilize business sentiment, global economic conditions are also testing the confidence of business community."
Moreover, concerns related to the eventual tapering of quantitative easing (QE) by the US Federal Reserve and its impact on future FII flows continue to grip the market.
While the index has improved marginally compared to the previous quarter, it trails behind the Q4 2012 level.
The Dun & Bradstreet Composite Business Optimism Index for the third quarter of 2013 stood at a 130.6.
According to the report, there is depressed demand conditions, while the increase in optimism with regard to selling prices reflects the inability of companies to further hold back the price increase in the face of rising input prices and rupee depreciation.