India business sentiment falls, expectations rise on rate cut

For the first time in three months, the Indian business sentiment saw a decline due to rising input prices.

A MNI India Business Sentiment Indicator stated that the sentiment fell from 63.5 in February to present 62.7.

The downward trend was seen more in manufacturing firms. However, the Indian business sentiment rose in construction firms and service sector companies.

"It looks increasingly likely that the RBI will cut interest rates at its April meeting. Note, though, that input prices as well as prices charged have been trending higher recently, which will likely limit the extent of monetary easing," Chief Economist of MNI Indicators Philip Uglow said.

"The decline in confidence in March was relatively modest and sentiment is still up from the recent trough in December. Importantly most key measures in the survey have stabilised and turned upwards in recent months following the trend decline that has been in place since September 2014," Uglow added.

The survey noted that firms faced higher prices for their inputs and consequently, companies raised the prices they charged and expected them to increase further in the coming three months.

Another factor that added to companies' outlays was the depreciation of the rupee. Companies said that this made their imports more expensive. The indicator measuring the effect of the rupee exchange rate fell further into contraction to 46.3 from 48.4 in February, the survey added.