New Delhi: The MNI India Business Sentiment Indicator, a gauge of current confidence among BSE-listed companies, rose to 62.3 in October offsetting last month’s fall to 61.4.
The rise in sentiment, aided by the latest rate cut by the Reserve Bank of India, was observed across both manufacturing and construction companies, while sentiment among service sector companies fell for the fourth consecutive month, said London-based research firm MNI Indicators.
While sentiment rose in October it was less than expected given the greater than forecast 50 basis point cut in rates, with respondents more concerned about the general malaise in the economy and subdued demand globally, it said. Moreover, this month’s result was even more disappointing given that this is a festival period when usually there is more business and purchase activity.
Panelists reported that weak global growth continued to hurt demand. Export Orders were 8.4% below the series average while New Orders were 13.1% down on the year, MNI Indicators said. Production growth also moderated between September and October.
The decline in global commodity prices led to an easing in raw material costs for the fourth consecutive month in October. Some companies, however, raised their prices to increase their margins and also make up for previous cuts in selling prices.
While output and orders have eased, there were clear signs that the four rate cuts since the start of the year were starting to flow through in the form of cheaper and more plentiful credit. The cost of debt service has fallen dramatically since the start of the year and hit a record low this month and subsequently the availability of credit has improved, it said.
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