The downturn in India’s business sentiment seems to have bottomed out as listed firms reported significant improvement in production levels, domestic as well as export orders this month, a survey said today.
Deutsche Boerse’s MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, rose by 7.7 per cent to 67.1 in June from 62.3 in May.
Results of the June business survey provide a tentative sign that the downturn in overall sentiment may have bottomed, it said.
“It would be unwise to read too much into one month’s data but the brighter tone of the June survey provides an early signal that the trend decline in sentiment since peaking in September last year may have run its course,” MNI Indicators Chief Economist Philip Uglow said.
As per the report, the June interest rate cut seems to have contributed to the rise in business confidence. Moreover, the depreciation in rupee stimulated exports orders.
In the policy review meet on June 2, RBI had cut interest rate by 0.25 per cent for the third time this year to spur investment and growth but hinted that there may not be any more cuts in the near-term.
“Exporters have been benefiting from the rupee’s depreciation and demand for labour is at the highest for a year,” Uglow added.
Having acted as a dampener on sentiment for months, there was finally an up-tick in demand from abroad as the export orders indicator rose 13.2 per cent in June. Moreover, firms also anticipated that the weaker rupee would help support external demand over the coming months.
On inflation, the report said though companies’ input costs have risen sharply in 2015, they were reluctant to pass on rising costs to customers.
MNI Indicators, part of the Deutsche Boerse Group, offers macroeconomic data and insights into businesses and investment community.