Retail stocks gain on FDI approval

Shares of retail firms surged by as much as 19% on the bourses this morning, a day after the government approved 51% FDI in the multi-brand retail sector and removed the cap on FDI in single-brand retail.

The decision will be a game-changer for the estimated $590 billion (Rs 29.50 lakh crore) retail market dominated by neighbourhood stores.

Cheering the news, shares of Vishal Retail skyrocketed by 18.83% to an early peak of Rs 22.60, while Pantaloon Retail India jumped by 17.12% to a high of Rs 234.95 and Shoppers Stop climbed by 14% to Rs 424.70 on the BSE.

In addition, Trent rose by 11.57%, Koutons Retail advanced by 14.28% and Provogue (India) surged by 14.92% in morning trade.

In a major decision, the government yesterday approved 51% FDI in multi-brand retail, paving the way for global giants like WalMart to open mega stores in cities with a population of over one million.

Previously, no FDI was allowed in multi-brand retail, while 51% was allowed in single-brand retail. However, 100% FDI was allowed in the wholesale cash-and-carry business.