Business sentiments down by 7.7% in second quarter compared to last year: D&B report

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MUMBAI: Business sentiments continue to decline for the country’s financial and macro-economic conditions in the second quarter of the year compared to the same period a year before, as per a Dun & Bradstreet (D&B) report.

Dun & Bradstreet Composite Business Optimism Index stands at Index stands at 78.4 during Q2 2019 as against 85.0 during Q2 2018 marking a 7.7% decline as per the report.

According to the report the sentiments were marginally up by 6.3% compared to the first quarter. D&B Composite Business Optimism Index stands at 78.4 during Q2 2019, an increase of 6.3% as compared to Q1 2019, the report said.

The earlier decline in the business sentiments were down due to the banking fraud and its impact continue to unfold, and the tightening actions on LoUs and LoCs have led to reduced liquidity. Also, there is an apprehension of tighter regulatory and lending norms. Further, India is unlikely to remain immune to the sabre-rattling and posturing by leaders that are key to global trade, the report had said.

The jump in the sentiments the second quarter compared to the first quarter this year however was mainly due easing of liquidity and foreign investors warming up to India, the report said.

“The Dun & Bradstreet Business Optimism Index for Q2 2019 has marginally increased compared with the previous quarter as a result of several positive developments: The monetary easing and liquidity support by some of the major Central Banks globally, steady inflow of foreign investments, increase in aggregate investment limit for Foreign Portfolio Investors, measures to improve flow of funds to the commercial sector, easing norms and cost of borrowing overseas for importers, easing depreciation pressures over rupee, increased forex reserves, increasing corporate profitability and expectation of election related spending are likely to have supported optimism levels during Q2 2019,” said Manish Sinha, Managing Director, D&B India.

For calculating the Composite Business Optimism Index, each of the five parameters (excluding inventory) is assigned a weight. The positive responses for every parameter for the period under review are expressed as a proportion of positive responses in the base period (2011). The parameter weights are then applied to these ratios and the results aggregated to arrive at the Composite Business Optimism Index, the report added.

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