Bad news! India's business confidence declines again

Country's business confidence dropped for a second straight month during April on account of deteriorating financial positions of the corporates, says a report.

"Business sentiment for April showed that confidence fell for a second consecutive month, albeit marginally, as firms' financial position deteriorated," MNI India Business Sentiment Indicator report said.

According to the indicator, which measures sentiment among BSE-listed companies, confidence among businesses fell to 62.4 in April from 62.7 in March owing due to low production, unchanged employment climate.

"Confidence was down 2.3 per cent compared with the same month a year ago," it added.

The sentiment was sluggish in April for construction and service sectors firms, however, confidence among manufacturing companies increased in the said period.

"A second consecutive decline in sentiment is a reminder that all is not well for India's largest companies," MNI Indicators Chief Economist Philip Uglow said.

As per the report, a policy rate cut of 25 basis points recently by RBI hasn't impacted business sentiment yet.    

"Monetary easing has tended to provide only a short-term boost to business confidence and has failed to cause a sustained increase," the report noted.

"The pace of inventory building picked up and firms expected stock levels to expand over the next three months given expectations of strong demand," the report said.

Besides, the report said firms were less upbeat about the next three months, with expectations easing to 69.6 in April from 71.9 previously.

MNI Indicators, part of Deutsche Boerse Group, offers macroeconomic data and insight to businesses and the investment community.