India’s composite index of Chief Financial Officers (CFOs) increased to 103.7 in Q4 2023, 9.1 percentage points higher on quarter-on-quarter (qoq). According to a recent survey of CFOs in India, conducted by global provider of business decision data and analytics ‘Dun & Bradstreet India’, overall optimism for financial performance stands at 99.0 in Q4 2023, which is the highest in eight quarters, reaching the two-year mark high note
The CFO survey revealed that CFOs’ confidence in financial conditions and macroeconomic conditions has improved significantly compared to the same period last year. Optimism for the general macroeconomic scenario decreased for the industrial sector by 6 percentage points (qoq).
Read also: Stock market today: Sensex, Nifty 50 end flat; realty, metals shine, pharma stocks drag
Optimism for the global macroeconomic scenario decreased, with 33 percent of respondents expecting it to decrease in Q4 2023, compared to 37 percent in Q3 2023, according to the survey. 52 percent of CFOs are optimistic about the demand for short-term funds in Q4 2023, the highest since the inception of the index in 2012.
Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet said, “Despite the escalating geopolitical tensions stemming from the Israel-Hamas conflict and the existing global financial stress of high interest rates and increased risk, the confidence of domestic CFOs remains firm. CFOs shows enhanced optimism compared to the previous quarter, forecasting enhanced business activity and a positive financial outlook for companies.”
The survey also found that 52 percent of CFOs are optimistic about the availability of funds in the market in Q4 2023, which is the highest in 11 quarters. Also, 42 percent of CFOs in the industrial sector expect the company’s operating margin to decrease in Q4 2023, 9 percentage points lower than Q3 2023.
”Businesses are quickly adapting to the high interest rates, raising hopes for an early end to monetary tightening and an increase in consumer demand. This change drives the need for increased working capital and credit for capital expenditures. However, there is an anticipation of enhanced financial risks related to balance sheet volatility due to turbulence in global capital markets. Specifically, the industrial sector faces challenges with expected rising costs affecting operating margins, likely to remain moderate,” Singh added.
The Dun & Bradstreet India Composite CFO Optimism Index analyzes the optimism level of CFOs on 12 parameters, which are as follows:
– Operating margin
-Liquidity position
-Level of financial risk on the company’s balance sheet
-Risk appetite
-Need to raise short and long term funds
-Cost of raising funds, availability of funds
-Domestic and global macroeconomic scenario
-Generally a scenario for mergers and acquisitions
-Level of financial risks for businesses.
The Dun & Bradstreet India Composite CFO Optimism Index, which tracks the changing sentiment of CFOs since 2012, is a leading indicator of the Indian financial market as it helps predict the performance of the Sensex three months in advance.
A sample of firms belonging to basic goods, capital goods, intermediate goods, consumer durables, consumer nondurables and the service sector is selected randomly from the business credit information file of Dun & Bradstreet. The sample selected is representative of the business community of India.
As part of the survey, the CFOs are asked to state their expectations on whether the specified parameters pertaining to their respective companies and the general macroeconomic scenario will register an increase, decrease or show no change in the following quarter compared to the same one. quarter of the previous year.
Milestone Warning!Livemint tops charts as the fastest growing news site in the world 🌏 Click here to know more
Catch all Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates and Live Business News.
More or less
Updated: 23 Nov 2023, 15:56 IST