Indian consumer confidence improves

Consumer sentiment in India rose for a second month in February, according to a reading by MNI. The continued its drop across 2013 but stabilized after new government came to power in 2014. Index is still down by 5.2% for the year but looks like the current path is on upside.

 Consumers are happy due to,

• Fall in oil price as it slowly sips through economy and prices.
• Lower inflation after years of high prices.
• Stable government and improved monetary policy and condition. RBI reduced rates twice this year.

MNI is yet to release business confidence data that fell by 6.1% in January to 64.2. Similar performance could be in line.

Business confidence -

• Business confidence reading hits lowest since April 2014 in January.
• Government in spite of remaining committed towards reforms and to make India, a friendlier place to do business failed to pass any significant reforms as it lacks majority in the upper house of the parliament.
• Nevertheless India improved the policies over the recent union budget and cut its tax rate by 5% over the next four years.
• RBI is handling the monetary situation well and building up India's foreign reserves which are currently at all-time high of $334 billion.

Despite dollar headwinds and constant buying by country's reserve bank rupee is expected to do better among peers along with the country's stock market. Nifty is currently trading at 8700 after it failed to break above 9000 mark decisively. The index is still up more than 5% for the year. Chart courtesy Financial Times.