Mumbai, April 18: The business confidence of India Inc has risen during the second quarter of 2006 compared with the previous period, according to the Business Optimism Index released by Dun and Bradstreet India today.

In its survey, Dun and Bradstreet (D&B) has reported a steady outlook for the Indian economy despite a sharp rise in global crude prices.

The D&B business expectation survey for the period was conducted in March.

The composite business optimism index has recorded an increase by 5.8 per cent to 177.5 from 167.7 in the first quarter. While the volume of sales, net profits and new orders recorded a decline, selling prices, inventory levels and employee strength have increased.

“The survey reflects high business optimism and demand conditions are expected to remain strong,” said Manoj Vaish, president and chief executive officer, Dun and Bradstreet India.

“Going forward, interest rate movements and inflation rates could affect the business optimism,” he added.

The index measures the pulse of the business community and is arrived at on the basis of a quarterly survey of their expectations. It surveys companies from several sectors, including basic, capital as well as intermediate goods, consumer durables, consumer non-durables and services.

The corporate sector has shown a greater optimism about future sales prospects with approximately 88 per cent respondents expecting sales volumes to increase during the quarter. However, about 3 per cent are expecting a decline. The index for volume of sales was at 85 per cent compared with 88 per cent in the previous quarter.

The optimism index for net profits for the quarter stood at 80 per cent, 3 percentage points down from the previous quarter. About 83 per cent of the respondents anticipate an increase in profitability, while 3 per cent expect a decline in profits.

Approximately 52 per cent of the respondents anticipate selling prices to go up, while 8 per cent expect prices to decline. Thus, the index for selling prices was at 44 per cent, an increase of 6 percentage points from the previous quarter.

The index for new orders is at 82 per cent, a decrease of two percentage points over the previous quarter with about 85 per cent respondents expecting their order book position to improve and 3 per cent anticipating a decline.

The index for employees stood at 53 per cent compared with 49 per cent in the previous quarter with about 57 per cent respondents anticipating an increase in the staff size and 4 per cent expecting a decline.

About 58 per cent of the respondents intend to increase their inventory levels, while about 7 per cent expect their stocks to decline during the quarter. The optimism index for inventory levels stood at 51 per cent, an increase of 9 percentage points over the previous quarter.