Business sentiment moves into positive zone in January

Business sentiment among Indian companies rose for the first time in three months in January, largely supported by the first increase in new orders since last June, a survey said on Wednesday.

Deutsche Boerse's MNI India Business Sentiment Indicator, a gauge of current sentiment among Bombay Stock Exchange-listed companies, rose from 60.7 in December to 61.8 in January - the highest since October 2015, as domestic orders strengthened.

"On the whole, the January survey was a little more positive, although not unanimously so. On the brighter side, overall sentiment was up, supported by the first increase in new orders since last June," MNI Indicators chief economist Philip Uglow said.

The rise in sentiment was across both manufacturing and service companies while that of the construction sector fell.

While the companies were more confident about the current business environment, their expectations for the next three months "lacked spark", the report said.

In January, the expectations indicator eased to 71.6, from 74.3 in December.

One change from previous months was that firms were more optimistic about demand. The expectations indicator for new orders was up 2.6 per cent month on month, a sign that the prolonged deterioration in domestic demand conditions may be coming to an end.

"While just under one-fifth of the panel thought the Modi government has had a positive impact on their business, over 50 per cent said they had not seen any impact. To change this perception, the government should quicken its steps at reforming the economy," Uglow added.

Asked specifically about the impact of the Modi government on businesses, 17 per cent of respondents reported that their business performance is better under the new government.

Many said quicker clearances and implementation of business proposals is benefiting the business environment.

Nearly 57 per cent reported that their business had been unaffected by the government's policies while 4.3 per cent felt that their business had worsened. Some 22 per cent said it's "too early" to draw any conclusions.