CFO Optimism Running High On Business Environment: D&B

New Delhi: The level of optimism among India's chief financial officers during October-December touched a 7-quarter high even as demonetisation is expected to impact sentiments going ahead, says a report.

"The Composite CFO Optimism Index for Q4 2016 increased by around 2.5 per cent on a quarter-on-quarter basis and by around 13 per cent on a year-on-year basis," according to D&B India's Chief Financial Officers (CFO) survey released on Thursday.

The survey was conducted last month while the government announced demonetisation of Rs 500 and Rs 1,000 banknotes earlier this month.

"Amidst moderating inflation and expectations of improving economic growth, the CFOs remain optimistic about the operating margin of their companies in Q4, 2016," Arvind Raghav, Director, Dun & Bradstreet India said.

According to the survey, the two main factors that are likely to have a major influence on business sentiments in the coming months include Fed rate hike and demonetisation, which has constrained cash transaction and in turn, has impacted the consumption demand in the near term.

"Expectation over the Fed rate hike and the impact of demonetisation on the domestic economy, will be two broad factors which will have a major influence on the way business sentiment shapes up going ahead," Raghav said.

Around 60 per cent of the CFOs expect liquidity position of their company to improve - highest in eight quarters.

More than three-fourth of the CFOs expect level of financial risks on company's balance sheet to decrease or remain unchanged in October-December quarter of this year compared to last year.

"The continuance in the optimism level amongst the CFOs about the improvement in the liquidity position of the company coupled with the expectation of decline in cost of raising funds indicate that going ahead CFOs will be in more comfortable situation to manage their funds," Raghav said.

The uncertainty over the strengthening of the global economic growth has, however, dented the optimism of the CFOs in the services sector, while CFOs in the industrial sector remained optimistic for both financial condition and the macroeconomic scenario, the survey said.

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