While the overall business sentiment continues to remain optimistic, some cautiousness exists on account of high inflation and expected hardening of interest rates
Corporate India is upbeat about the robust growth prospects in the current quarter, with an index measuring business optimism levels rising sharply for the April-June period, though concerns remain over high inflation and a possible rise in interest rates, reports PTI.
“While the overall business sentiment continues to remain optimistic, some cautiousness (exists) on account of high inflation and expected hardening of interest rates,” research firm Dun & Bradstreet said today, while releasing its ‘Composite Business Optimism Index’.
It further said that policy announcements—both on the monetary and fiscal front—to tackle soaring inflation were likely to play a vital role in shaping business sentiment in the April to June quarter.
The monsoon is another crucial factor that will determine the business sentiment in the next quarter.
“While business confidence has continued to rise during Q2, 2010, some signs of cautiousness are visible in the relatively lower resultant optimism for volume of sales, net profits and new orders as compared to Q1, 2010,” Dun & Bradstreet India president and CEO Kaushal Sampat said.
The Business Optimism Index (BOI), which measures the pulse of the business community, increased by 3.8 on a quarter-on-quarter basis to 142.8 points in the April to June period of 2010.
As compared to the second quarter of 2009, the BOI witnessed a substantial increase of 52% from an all-time low of a level of 93.8.
For calculating the composite BOI, six parameters—net sales, net profits, selling prices, new orders, inventories and employee levels, are assigned a weight. The parameter weights are then applied to these ratios and the results aggregated to arrive at the index.
The index is arrived at on the basis of a quarterly survey of various business expectation parameters.
It was observed that all the six optimism indices have increased compared to the previous quarter, the release said.
According to the report, the employment scenario is likely to remain stable in the forthcoming quarter, with 47% of respondents expecting no change in the size of the workforce during the second quarter of 2010.
In comparison, 46% expect an increase in employment levels and another 7% anticipate a decline.