The MNI India Consumer Sentiment Indicator rose by 3% to 122.1 in April from 118.5 in March with respondents more optimistic about their current circumstances, underpinned by the recent easing in the key interest rate by the Reserve Bank of India in March.
Having fallen throughout most of 2014, sentiment has stabilised in recent months with the latest increase leaving consumer confidence at the highest since October 2014. This could mark a turning point in sentiment as consumers have reacted positively to the two cuts in benchmark interest rates since the start of the year.
Consumers’ assessment of current conditions rose to a seven-month high of 115.7 in April. There was also greater optimism about the future, with the Expectations Indicator rising for the first time this year.
While overall consumer sentiment was above the 100 breakeven level, meaning that optimists outnumbered pessimists, it was still down 2.5% on the year and below the series average of 123.1.
With consumers feeling financially better off in April, more of them were willing to shell out on large household items. The Durable Buying Conditions Indicator rose to a seven-month high of 113.0 in April, up 6.2% on the year. There was also good news for the automobile industry as consumers were more enthusiastic about making a car purchase in the next 12 months as the cut in benchmark rates lowered borrowing costs.
Respondents were more satisfied with the current business environment in April. The Current Business Conditions Indicator was up by 7.5% on the year. This was in contrast with expectations for future business conditions as Expectations for Business Conditions in One Year and Five Years were both down by 2% and 4.8% on the year respectively.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “Consumers have reacted positively to the two cuts to official interest rates since the start of the year with the MNI India Consumer Sentiment Indicator hitting a 6-month high in April. While confidence is still below the series average, the stabilisation in sentiment in recent months following the 2014 slide could well mark a key turning point.”
“Following the recent fall in equity prices in April, respondents judged stocks to be correctly priced. With the vast majority reporting that they expected equity prices to rise over the coming three months, we could see more retail investors tempted into the market, increasing participation from a very low level.”
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March Rate Cut Boosts Consumer Sentiment In India - MNI Consumer Sentiment Indicator At Six-Month High In April
Date 06/05/2015