The busy festival season failed to bring cheer to India’s largest companies in November, as business sentiment fell to the lowest level since February 2014, with companies also seeing little chance of a revival over the coming months, according to research firm MNI Indicators.
The MNI India Business Sentiment Indicator, a gauge of sentiment among BSE-listed companies, fell to 60.9 in November from 62.3 in October, to stand 11.6% down on the year. The fall in sentiment was observed across both manufacturing and construction companies, while sentiment among service sector companies rose for the first time in five months, it said.
According to MNI Indicators, new orders fell slightly between October and November, leaving orders down 11.1% on the year. Export orders fared better, putting in a rise of 5.3% on the month, although were still 9.4% below the same level in November 2014. The production indicator fell for the second consecutive month and was down 14.1% on the year.
Companies were less optimistic about the next three months with the Expectations Indicator falling to 72.2 in November from 75.1 in October.
The only real positive came from an improvement in company’s balance sheets, with the decline in commodity prices and interest rate cuts pushing the Financial Position Indicator higher for the second month in a row. It now stands above its series average, although companies have been reeling under the pressure of high debt and low sales for most of 2015.
“Weak demand means that companies are unable to capitalise on the positives of lower input costs and looser monetary policy,” said MNI Indicators chief economist Philip Uglow.