MNI India Business Sentiment Falls to 64.2 in January

DELHI, India, Jan. 28, 2015 /PRNewswire/ -- The MNI India Business Indicator experienced the sharpest fall in 11 months, declining 6.1% to 64.2 in January from 68.4 in December 2014.

Business confidence eased for the fourth consecutive month to the lowest level since April 2014, the month before Narendra Modi was elected as Prime Minister. Sentiment is almost 10% down from its peak in September and barely above the level in January 2014.

The "Modi boost" we witnessed following the election has waned gradually as businesses have become increasingly disappointed with a lack of concrete reforms to lift the economy out of its current slump. It was companies within the manufacturing sector in particular, a key focus of the incumbent government, which revised down their perception of the current business environment.

Along with overall business sentiment, key activity metrics such as New Orders, Production and Order Backlogs all fell below their averages for 2014 in January. New Orders declined to the lowest in just over a year, while Production fell to the lowest since July 2014. One of the biggest concerns among companies was the appreciation of the Indian rupee with one-fifth of our panel reporting that the current exchange rate was hurting their business operations.

The Reserve Bank of India's (RBI) decision to cut the key policy rate by 25 basis points to 7.75% in early January came a tad late in our survey period to have a material impact on this month's results.

One positive from the survey this month was that companies were willing to take on more workers, as reflected by the improvement in the Employment Indicator to 50.8 in January from 50.0 in December, a seven-month high.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "While the MNI Business Indicator stands significantly above the levels seen in 2013 when India was in the midst of a currency crisis, the continued downturn in sentiment serves as a note of caution to some of the more optimistic forecasts for India's growth."

"In hand with the recent weakness in our sister consumer survey and the continued low level of inflation, there is scope for the RBI to loosen monetary policy further."

For further information, please contact:

Naomi Pickens
Public Relations
naomi.pickens@deutsche-boerse.com
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Editorial Content:

Philip Uglow
Chief Economist, MNI Indicators 

Notes to Editors
Please source all information to MNI Indicators.

MNI India Business Sentiment is a monthly poll of Indian business executives at companies listed on BSE (formerly known as the Bombay Stock Exchange). Companies are a mix of manufacturing, service, construction and agricultural firms.

Respondents are asked their opinion on whether a particular business activity has increased, decreased or remained the same compared with the previous month as well as their expectations for three months ahead, e.g. is Production higher/same/lower compared with a month ago?

Diffusion indicators are then calculated by adding the percentage share of positive responses to half the percentage of those respondents reporting no change. An indicator reading above 50 shows expansion, below 50 indicates contraction and a result of 50 means no change.

Data is collected via telephone interviews. More than 400 companies are surveyed each month. The survey has been in place since November 2012.

About MNI Indicators

MNI Indicators, part of Deutsche Borse Group, offers unique macro-economic data and insight to businesses and the investment community. We produce data and intelligence that is unbiased, pertinent and responsive. Our data moves markets.

For more information, visit our website at www.mni-indicators.com.