The MNI India Business Sentiment survey has reported that confidence among Indian businesses fell to a five month low in May, and also stated that with rising inflationary pressure, there is limited scope for the RBI to cut rates.
As per the report the Deutsche Boerses MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, declining for the third consecutive month fell from 62.4 in April to 61.8 in May, lowest since December 2015. The survey further stated that the decline was led solely by the manufacturing sector, while sentiment among construction and service sector firms improved.
The survey further said that the recovery in global commodity prices, especially crude oil, pushed up input costs following which prices charged by firms also rose to the highest since November 2014. It also stated that new orders held steady in May, although expectations for the coming three months eased for the third month in a row. In contrast, Export Orders fell to 52.9, the lowest level since May 2013.
MNI Indicators Chief Economist Philip Uglow, commenting on the survey findings said that with growth in China weakening, there has been increased focus on India's ability to grow rapidly for a sustained period. Evidence from the MNI India Business Sentiment Survey, though, paints a relatively subdued picture with output growth in particular running at a low level.