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September 03, 2019

Sentiment moderates

CriSidEx survey for April-June 2019 and July-September 2019

Business sentiment in April-June 2019

Survey 7 found that overall sentiment remained weak in Q1FY20.

 

Manufacturing sentiment index declined on-year owing to

  • Consumption slowdown stemming from higher ownership cost, axle norms and inventory build-up impacting the auto sector, and thereby auto-components
  • Election slowdown and low domestic tendering, especially in the capital goods segment
  • Cautious outlook on textile export demand owing to moderation in global growth

Services sentiment index, too, dipped on-year, though not as sharply as manufacturing. The dip was mainly on account of

  • Cautious outlook on global economic growth, which is expected to impact IT spends
  • Slower growth in domestic freight demand, given sluggish consumption

Sectors that saw a positive trend

  • Among manufacturers, 27% reported a good SQ7, lower than 45% in the same quarter a year ago (S3) and also lower than 42% in the previous quarter (S6). In fact, positive sentiment in SQ7 was the lowest among the past five quarters
    • In SQ7, chemicals, pharmaceuticals and metal & mininghad the highest share of respondents who reported a goodquarter. In pharmaceuticals, which is an export-linked sector,an improving product pipeline will benefit the profit spreadsof players as currency tailwind abates.
    • On-year basis (S3 to S7), no sector reported increase in share of respondents with positive sentiment
  • Among service providers, 28% reported a good SQ7, lower than 44% in the same quarter a year ago (SQ3) and also lower than 39% in the previous quarter (S6). However, here too, positive sentiment in SQ7 was the lowest among the past 5 quarters
    • In SQ7, commercial services & supplies, human resources, healthcare providers & services and professional services segments had the highest share of respondents who reported a good quarter
    • On-year basis (S3 to S7), commercial services & supplies, healthcare providers & services and human resources reported increase in share of respondents with positive sentiment