The MNI India Business Indicator fell to 59.4 in September from 64.0 in August, but remained significantly above the low seen in April.
Most of the indicators in the report showed a continued recovery in September, and it is likely that the downturn in overall business conditions was due to concerns surrounding the rupee, with companies reporting further pain from the decline in the exchange rate.
Both Production and New Orders recovered further in September rising to their highest level since the series began in November 2012, led by gains in manufacturing.
Inflationary pressures increased in September with an increase in the Prices Received Indicator suggesting wholesale price inflation is likely to remain at raised levels for now.
Companies reported that the depreciation in the rupee was hurting business with the indicator measuring the impact of the exchange rate hitting the lowest level since the series began in November 2012.
Commenting on the latest survey, MNI Indicators Chief Economist Philip Uglow said, “In spite of the plunge in the rupee and the stream of negative headlines on India, our data shows that growth may have troughed in April.”
“The economic recovery, though, is likely to be slow, given the relatively weak global outlook, high level of domestic inflation and the negative impact from the recent hike in the policy rate on growth,” he added.