<h2>Executive Summary</h2><p><strong>IMA’s BCPI index</strong> declined sharply in April 2026, to 53.3 – its lowest level since just after the March 2020 lockdowns. </p><p>This <strong>reversed the strong gains</strong> seen in the previous quarter.</p><p>Plainly, the <strong>Iran War has cast a long shadow</strong> over India Inc.</p><p>The fall was <strong>broad-based</strong>, with profitability, capacity utilisation, sales and new orders all <strong>weakening</strong>.</p><p>Sentiment has <strong>weakened</strong> across sectors, though consumer goods and IT & ITeS has stayed mostly resilient; industrials and automotive companies now lag.</p><p><strong>Services</strong> firms remain relatively more confident on demand and profitability, while <strong>manufacturing</strong> continues to lead on capex intent.</p>.<h2><strong>The Q1 FY27 BCPI: Weakening</strong></h2>.<h2><strong>The Sectoral View: </strong>Sentiment Weakens Across the Board</h2>.<h2><strong>Slowing Cross-Sectoral Momentum</strong></h2>.<h2><strong>Sales and New Orders: Moderating Demand</strong></h2>.<p>Business sentiment has turned negative across all of the main parameters we measure. The net score for sales declined by over 22 points, to 19.4, while that for new orders fell by ~24 points to 20.8. </p><p>Despite the broad-based decline in net scores, services firms exhibit relatively stronger confidence on both sales and new orders compared to their manufacturing peers. At the sectoral level, consumer goods leads on both metrics, with net scores of 50 for sales and 55.6 for new orders. In contrast, automotive and BFSI firms report negative sales expectations, while industrials reflect pessimism on new orders. Smaller firms (< Rs 500 crores) are currently more optimistic on both counts than their larger peers.</p>.<h2><strong>Profitability and Capacity Utilisation: Trending Down</strong></h2>.<p>Sentiment around profitability and capacity utilisation has weakened compared to the previous quarter. The net scores for profitability have slipped into negative territory at -4.6, reflecting a 24-point decline, while capacity utilisation, though still positive at +6.5, has dropped even more significant (~31 points). </p><p>At a segment level, services firms continue to outperform manufacturers on both profitability and capacity utilisation. Sectorally, IT & ITeS leads on the profit outlook, while consumer goods and IT & ITeS report the strongest expectations for capacity utilisation. Industrial firms are downbeat on profitability, while automotive and general services firms lag on capacity utilisation. Across revenue bands, firms uniformly report negative sentiment on profitability, although mid-sized firms (Rs 500–2,500 crores) are relatively more optimistic on capacity utilisation.</p>.<h2><strong>New Hiring: Still Soft; CapEx: Recovering</strong></h2>.<p>Hiring activity remains tepid, while capex expectations have picked up after a dip in Q4. At a segment level, services firms display stronger hiring intent, while manufacturing firms lead on capex expectations. Sectorally, construction stands out with the strongest outlook on both hiring and capex, whereas industrials report negative sentiment across both parameters. By firm size, smaller companies (below Rs 500 crores) retain positive hiring expectations, while larger firms (above Rs 2,500 crores) lead in terms of capex intentions.</p>.<h2><strong>Soft Spends: </strong>Losing Ground</h2>.<p>Sentiment on discretionary or ‘soft’ spends has weakened across the board, with the net scores negative on all fronts. IT & ITeS and consumer goods are the only sectors reporting positive sentiment on advertising spends, while BFSI stands out as the sole sector with a positive outlook on spending for team-morale initiatives. In contrast, no sector reports positive sentiment on travel allocations, indicating a broad-based pullback in this category.</p>.<h2><strong>Annexure 1: Headline Results</strong></h2>.<h2><strong>Annexure 2 – Business Performance – Net Scores</strong></h2>
<h2>Executive Summary</h2><p><strong>IMA’s BCPI index</strong> declined sharply in April 2026, to 53.3 – its lowest level since just after the March 2020 lockdowns. </p><p>This <strong>reversed the strong gains</strong> seen in the previous quarter.</p><p>Plainly, the <strong>Iran War has cast a long shadow</strong> over India Inc.</p><p>The fall was <strong>broad-based</strong>, with profitability, capacity utilisation, sales and new orders all <strong>weakening</strong>.</p><p>Sentiment has <strong>weakened</strong> across sectors, though consumer goods and IT & ITeS has stayed mostly resilient; industrials and automotive companies now lag.</p><p><strong>Services</strong> firms remain relatively more confident on demand and profitability, while <strong>manufacturing</strong> continues to lead on capex intent.</p>.<h2><strong>The Q1 FY27 BCPI: Weakening</strong></h2>.<h2><strong>The Sectoral View: </strong>Sentiment Weakens Across the Board</h2>.<h2><strong>Slowing Cross-Sectoral Momentum</strong></h2>.<h2><strong>Sales and New Orders: Moderating Demand</strong></h2>.<p>Business sentiment has turned negative across all of the main parameters we measure. The net score for sales declined by over 22 points, to 19.4, while that for new orders fell by ~24 points to 20.8. </p><p>Despite the broad-based decline in net scores, services firms exhibit relatively stronger confidence on both sales and new orders compared to their manufacturing peers. At the sectoral level, consumer goods leads on both metrics, with net scores of 50 for sales and 55.6 for new orders. In contrast, automotive and BFSI firms report negative sales expectations, while industrials reflect pessimism on new orders. Smaller firms (< Rs 500 crores) are currently more optimistic on both counts than their larger peers.</p>.<h2><strong>Profitability and Capacity Utilisation: Trending Down</strong></h2>.<p>Sentiment around profitability and capacity utilisation has weakened compared to the previous quarter. The net scores for profitability have slipped into negative territory at -4.6, reflecting a 24-point decline, while capacity utilisation, though still positive at +6.5, has dropped even more significant (~31 points). </p><p>At a segment level, services firms continue to outperform manufacturers on both profitability and capacity utilisation. Sectorally, IT & ITeS leads on the profit outlook, while consumer goods and IT & ITeS report the strongest expectations for capacity utilisation. Industrial firms are downbeat on profitability, while automotive and general services firms lag on capacity utilisation. Across revenue bands, firms uniformly report negative sentiment on profitability, although mid-sized firms (Rs 500–2,500 crores) are relatively more optimistic on capacity utilisation.</p>.<h2><strong>New Hiring: Still Soft; CapEx: Recovering</strong></h2>.<p>Hiring activity remains tepid, while capex expectations have picked up after a dip in Q4. At a segment level, services firms display stronger hiring intent, while manufacturing firms lead on capex expectations. Sectorally, construction stands out with the strongest outlook on both hiring and capex, whereas industrials report negative sentiment across both parameters. By firm size, smaller companies (below Rs 500 crores) retain positive hiring expectations, while larger firms (above Rs 2,500 crores) lead in terms of capex intentions.</p>.<h2><strong>Soft Spends: </strong>Losing Ground</h2>.<p>Sentiment on discretionary or ‘soft’ spends has weakened across the board, with the net scores negative on all fronts. IT & ITeS and consumer goods are the only sectors reporting positive sentiment on advertising spends, while BFSI stands out as the sole sector with a positive outlook on spending for team-morale initiatives. In contrast, no sector reports positive sentiment on travel allocations, indicating a broad-based pullback in this category.</p>.<h2><strong>Annexure 1: Headline Results</strong></h2>.<h2><strong>Annexure 2 – Business Performance – Net Scores</strong></h2>
