Indian firms among world’s most optimistic, HSBC survey shows stronger demand and profit outlook

New Delhi: Indian private sector companies remain optimistic about the year ahead, supported by strong demand, favourable market conditions, tech investment and improved customer relations, according to a private survey released Wednesday. Respondents also said greater online presence and marketing efforts are expected to aid performance.

The headline HSBC India business activity net balance rose to +28% in October from a year-low of +25% in June. In comparison, the global average was +24%. This reading placed India among the world's most confident markets, trailing only Brazil, Ireland, the UK and the US.

"Optimism around business activity and profitability strengthened compared to the previous survey as well as the global averages," said Pranjul Bhandari, India chief economist at HSBC.


Confidence rose across sectors, with the net balance for manufacturers increasing to +29% in October from +27% in June, and for service providers to +28% from +24%. The HSBC India Business Outlook Survey is based on a panel of around 800 companies in the manufacturing and services sectors.

Profitability expectations were also the highest in a year, at +24%, the strongest reading among 12 nations surveyed.

"Underlying data showed that firms' upgraded earnings projections reflected a combination of upbeat sales forecasts, mild cost pressures and sustained pricing power," the survey mentioned.

Hiring intentions, however, fell to a two-year low, mirroring muted global employment trends. Positive net balances were reported rising only in Ireland and Russia.

Indian companies remained confident about increasing capital expenditure over the next 12 months, with a net balance of +15%, the second-highest reading since mid-2023 and above the global average of +5%. Physical asset investment was predicted to increase at goods producers (+15%) and service providers (+16%), the survey noted. "The decline in capex was sharper at manufacturers while hiring expectations eased more among service providers," said Bhandari.

Non-staff cost expectations rose marginally to +6% in October from +5% in June, the survey said. Input price inflation expectations in India were the lowest among 12 countries surveyed.

Staff cost expectations rose to +16% in October from +13% in June, marking a one-year high. Globally, however, it remains mild, with only mainland China recording a lower figure at +9%.

"At the composite level, price pressures ticked up a tad for input costs and non-staff costs while inflation expectations for prices charged softened," said Bhandari.