NCAER Index Rises to 107.8 in Q2 FY27

What happened

The National Council of Applied Economic Research (NCAER) released its 138th round of the Business Expectations Survey, revealing that business sentiment improved in the July-September quarter (Q2) of fiscal year 2026–27 ^[2][15]. After declining for four consecutive quarters, the Business Confidence Index (BCI) climbed to 107.8 from 99.8 in the preceding quarter ^[2][15]. The survey, conducted in September, gathered responses from 502 companies of varying sizes across six major commercial hubs: Delhi-NCR, Bengaluru, Chennai, Kolkata, Mumbai, and Pune ^[14][15].

All four core indicators supporting the BCI registered positive quarter-on-quarter movements ^[15]. The share of firms expecting overall economic conditions to improve over the next six months rose to 50 percent from 43 percent, while expectations of improved financial positions increased to 41 percent from 37 percent ^[2][15]. Furthermore, the proportion of firms viewing the current investment climate positively rose to 30 percent from 26 percent, and firms anticipating capacity utilisation near or above optimal levels climbed to 94 percent from 91 percent ^[2][15]. Recovery was observed across both micro, small, and medium enterprises (MSMEs), whose index rose from 93 to 100, and large firms, whose index increased from 111.6 to 120.3 ^[14].

Why it matters

The rebound in the BCI provides a positive signal ahead of the festive season, pointing to a broad-based recovery in sentiment among both domestic and export-oriented businesses ^[14][15]. Firms expressed stronger optimism regarding production, with companies expecting production increases rising to 68 percent from 66 percent, and domestic sales anticipations strengthening to 71 percent from 67 percent ^[14]. Export prospects also improved, as the proportion of exporting firms expecting higher shipments increased to 62 percent from 55 percent ^[14]. Additionally, cost pressures moderated across several operational heads, with the share of firms expecting raw material costs to rise dropping to 60 percent from 67 percent, offering a solid foundation for industrial activity despite remaining below the 142.6 BCI recorded in the same quarter of the previous fiscal year ^[14][15].

What to watch

Observers will monitor whether the improvement in business sentiment translates into concrete operational decisions in subsequent quarters, particularly given that employment expectations remained subdued with most firms anticipating no change in hiring over the next six months ^[14]. Analysts will also track global uncertainties and import-export trends, following a sharp reported increase in the share of firms anticipating higher raw material imports from 35 percent to 55 percent ^[14].

Sources

1. Economic research says Indian business sentiment improved in 2nd Qrt of this fiscal | Akashvani News newsonair.gov.in
2. India Inc’s business confidence rebounds to 107.8 in Q2 FY27: NCAER survey | Indiablooms - First Portal on Digital News Management phoenix.indiablooms.com
3. Indian Business Sentiment Rebounds in Q2 FY27 - newsorbiter.com