Business optimism index (BOI) for the second quarter of this year has improved as there has been a positive shift in India Inc's sentiment despite economic uncertainty, says a Dun & Bradstreet report.
BOI, which measures the pulse of the business community, stands at 154.5 for Q2 2014, an increase of 9.1 per cent as compared to Q2 2013.
For calculating the composite BOI, each of the six parameters – net sales, net profits, selling prices, new orders, inventories and employee levels – is assigned a weight. The parameter weights are then applied to these ratios and the results aggregated to arrive at the Composite Business Optimism Index.
Five of the six optimism indices - volume of sales, new orders, net profits, selling prices and inventory levels - saw an increase as compared to Q2 2013, the report said.
"There has been a positive shift in business sentiment amongst India Inc. Even as business sentiment continues to be impacted by economic uncertainty, a sense of confidence appears to be slowly returning," said Kaushal Sampat, President & CEO, Dun & Bradstreet - India.
"The buoyant sentiment regarding future demand conditions, reflected in the 13-quarter high resultant optimism for volume of sales, underscores the confidence apparent in the domestic economy currently," he added.
Amongst the sectors, basic goods was found to be the most optimistic. The clearances awarded to projects under implementation by the Cabinet Committee on Investments and pickup in new project announcements could have played a role herein, he added.
Sampat said a stable political outcome after the election could provide a significant boost to business confidence in the forthcoming quarter.
"That said, sustenance of improved confidence levels would be contingent upon the effective and speedy implementation of structural reforms to stoke growth rates. This would correct the economic imbalances and shift the economy onto a more sustainable growth path," he added.
According to the report, the employment scenario in the country is likely to be muted in the coming quarter as more than half of the respondents (55 per cent) anticipate no change in the size of their workforce during Q2 2014.
The buoyant sentiment was reflected in new order expectations which increased by 12 percentage points when compared to Q2 2013.