Mumbai: Dun & Bradstreet India today released its 'business optimism index' (BOI) for India for the period April-June (Q2, calendar year 2006). The Dun & Bradstreet Business Expectation Survey for Q2 2006 was conducted in March, with the Indian economy looking steady despite a sharp rise in global crude oil prices.

The survey for Q2 2006 reveals that business confidence has risen compared to the previous quarter. The 'composite business optimism index' for Q2 2006 recorded an increase by 5.8 per cent to 177.5 from 167.7 in the previous quarter. For Q2 2006, volume of sales, net profits and new orders recorded a decline, while selling prices, inventory levels and employees increased over the previous quarter.

The corporate sector has shown greater optimism about future sales prospects in Q2 2006. Approximately 88 per cent of the respondents expect sales volumes to increase during the Apr-Jun 06 quarter, while about 3 per cent expect a decline in sales. The resultant 'optimism index for volume of sales' for Q2 2006 stands at 85 per cent as compared to 88 per cent in the previous quarter.

The resultant 'optimism index for net profits' for Q2 2006 stands at 80 per cent, indicating a decrease of three percentage points over the previous quarter. About 83 per cent of the respondents anticipate an increase in profitability, while 3 per cent expect a decline in profits during the forthcoming quarter.

About 52 per cent of the respondents anticipate selling prices to go up during the forthcoming quarter, while 8 per cent expect prices to decline. The resultant 'optimism index for selling prices' for Q2 2006 stands at 44 per cent, which is an increase of 6 percentage points from the previous quarter.

About 85 per cent of the respondents expect their order book position to improve, while only 3 per cent anticipate a decline in the number of orders. The resultant 'optimism index for new orders' for Q2 2006 stands at 82 per cent, a decrease of 2 percentage points over the previous quarter.

About 58 per cent of the respondents intend to increase their inventory levels while about 7 per cent expect their stocks to decline during the Apr-Jun 06 quarter. The resultant 'optimism index for inventory levels' for Q2 2006 stands at 51 per cent, an increase of 9 percentage points over the previous quarter.

Also, about 57 per cent of the respondents anticipate an increase in the size of their staff, an increase by 6 percentage points over the previous quarter. Further, only 4 per cent of the respondents expect a decline in the number of employees. The resultant Optimism Index for Employees for Q2 2006 stands at 53 per cent as compared to 49 per cent in the previous quarter.

"The survey reflects high business optimism and demand conditions are expected to remain strong," said Dr Manoj Vaish, president & CEO, Dun and Bradstreet, India. "Going forward, interest rate movements and inflation rates could affect business optimism in the future."

The D&B 'business optimism index' is widely recognised as an indicator, which measures the pulse of the business community and serves as a reliable benchmark for investors. The index is arrived at on the basis of a quarterly survey of business expectations.

The survey is conducted on a sample of companies that are selected randomly from D&B's commercial credit file. The sample selected is a microcosmic representation of the country's business community and includes companies from several sectors including basic goods, capital goods, intermediate goods, consumer durables, consumer non-durables and service sectors.

Respondents to the survey are asked six standard questions regarding whether specified parameters - net sales, net profits, selling prices, new orders, inventories and employee levels, will register an increase, decline or show no change in the ensuing quarter as compared to the corresponding quarter of the previous year. The indices are then calculated by subtracting the percentage of respondents expecting decreases from those expecting increases.

For calculating the 'composite business optimism index', each of the six parameters 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 (Q2 1999). The parameter weights are then applied to these ratios and the results aggregated to arrive at the 'composite business optimism index'.

D&B (NYSE:DNB) is a leading provider of global business information, tools, and insight.