India business confidence rises as RBI cut aids sentiment

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A hefty rate cut by the Reserve Bank of India late last month boosted business confidence in Asia's third-largest economy, a survey showed Tuesday.

The MNI India Business Sentiment Indicator, a barometer of confidence among companies on the Bombay Stock Exchange, climbed to 62.3 in October from 61.4 in September, said MNI Indicators, which produces the survey.

A rise in sentiment was reported across the manufacturing and construction sectors, while sentiment among service sector companies fell for the fourth consecutive month.

India's central bank surprised markets last month by cutting its key interest rate by 0.50 percentage points to 6.75 percent, its fourth interest rate reduction this year.

The flurry of rate cuts by India's central bank are starting to have an impact, as MNI Indicators said the cost of debt servicing for panel companies fell to a record low.

The increase still belies a softer outlook for goods produced by Indian companies. The read is also disappointing given that there is usually more consumer activity in anticipation of the festive period. India will celebrate the Diwali festival on November 10.

Export orders were 8.4 percent below the series average, while new orders slumped 13.1 percent from a year earlier.