Business sentiment sees slight improvement in October: Survey

New Delhi: Sentiment towards Indian business environment improved slightly in October, but the rise was less than expected as respondents were concerned about the general "malaise" in the economy and subdued demand globally, says a survey.

The MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, rose to 62.3 in October, offsetting last month's fall to 61.4. The rise in sentiment was across both manufacturing and construction companies, while sentiment among service sector companies fell for the fourth consecutive month.

“While sentiment rose in October, it was less than one might expect given the greater than expected 50 basis point cut in rates, with respondents more concerned about the general malaise in the economy and subdued demand globally,” the report said. It further said, "This is even more disappointing given that this is a festival period when usually there is more business and purchase activity."

Lackluster demand is behind the continued lack of optimism. The sluggish increase in output mirrored softer demand conditions, while growth of global demand for Indian goods also moderated.

“The general sogginess in production and orders continued through to October, with both now significantly down from levels a year ago."Of clear concern is the softness in export orders with India not immune to weakness in its key trading partners," MNI Indicators Chief Economist Philip Uglow said.

Uglow further said "monetary policy has been loosened considerably over the past year and firms are clearly starting to see the benefits of that coming through. This should help to underpin demand ahead, although for now there are few signs of a turn-around.’’

Reserve Bank Governor Raghuram Rajan on September 29 effected a more-than-expected interest rate cut of half a percent to boost the economy.