As per a Dun & Bradstreet (D&B) report, business sentiments in respect of conditions prevailing in the financial and macro-economic space continue to weaken in the second quarter for the year as against the corresponding period a year ago.
For the second quarter of 2019, the Dun & Bradstreet Composite Business Optimism Index is reported at 78.4 as against 85 for the second quarter of 2018, a decline of 7.7%.
However, the sentiment in comparison to the first quarter of 2019 has improved marginally, with an increase of 6.3% over the Q1 of 2019.
In the earlier business sentiments weakened on the back of banking fraud and its aftereffect was seen as stringent action taken in respect of LoCs and LoUs which led to reduced liquidity into the system. The report also added that the country is unlikely to be immune to the posturing by leaders and sabre-rattling by leaders that influence global trade.
Further, the marginal jump in sentiment in the second quarter is on account of foreign investors lap up of investments into India and also easing liquidity.
"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 the 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.