By IANS,
New Delhi : The Composite Business Optimism Index for India prepared by leading global market tracking and information services firm Dun and Bradstreet (D&B) has fallen by a record 28.1 percent in the last quarter of 2008, the largest-ever.
According to the company, the index fell to 138.9 from 193.2 in the corresponding quarter of 2007, and said it was the largest magnitude of fall ever witnessed in the index.
The D&B Optimism Index is widely recognised as an indicator measuring the pulse of the business community and serves as a reliable benchmark for investors.
The index is arrived at on the basis of a quarterly survey of business expectations.
All six sub-indices have fallen significantly as compared to the corresponding period last year.
The resultant Optimism Index for Net Profits has experienced a decline of as much as 21 percentage points compared to the last quarter of 2007.
The resultant Optimism Index for Volume of Sales has declined 17 percentage points on a year-on-year basis, which indicated subdued demand conditions.
The resultant Optimism Index for New Orders stands at 68 percent, an 18 percentage point decline compared to the corresponding period last year.
“The crisis of confidence being witnessed across the world’s financial markets is reflected in the deteriorating sentiment of the Indian business community,” Dun & Bradstreet India’s chief operating officer Kaushal Sampat said in the statement.
“The moderation in economic growth, high inflation and deepening global financial crisis have adversely affected corporate sentiment, as is evident from the decline of the index,” he said.
“Going forward, further developments in the global financial markets, their impact on the Indian financial sector and the outlook on global economic growth will determine the expectations of the business community over the next quarter,” Sampat said.
“The RBI’s monetary policy stance during the mid-term review is also likely to impact business sentiment in the next quarter,” he added.
As compared to the previous quarter, the Composite Business Optimism Index has registered a marginal increase of 1.8 percent. However, this is in part due to the low base of the previous quarter.
The quarter-on-quarter increase in the optimism indices can partly be attributed to a larger number of respondents anticipating no significant change from the current situation.
Among the sectors, services was the least optimistic.
Since a majority of the service sector respondents belong to the information technology, financial services, broking houses and trade segments, it is possible that the turmoil in the global financial markets and the bearish sentiment in stock markets have dampened their expectations.
Demand conditions are expected to remain subdued during the October-December 2008 quarter. However, given the forthcoming festive season, not many respondents expected the demand situation to deteriorate further.