Retail stocks rally in sluggish market

Shares of retail companies rallied on the bourses today on hopes that the government may soon notify 100% FDI (Foreign Direct Investment) in single-brand retail business.

Kishore Biyani-led Future group's Pantaloon Retail (India) surged 6.60% to settle at Rs 141.40, while Provogue (India) closed higher by 9.31% at Rs 22.30.

Koutons Retail gained 6.01%, Shopper's Stop ended 5.81% higher and Vishal Retail rose by 4.96%.

The rally in these counters was in sharp contrast with the sluggish broader market trend, where the BSE barometer Sensex ended 10.65 points higher.

However, shares of Tata group's retail venture Trent Ltd lost 2.22%.

When asked about the notification of 100% FDI in single-brand retail business, Secretary in the Department of Industrial Policy and Promotion (DIPP) P K Chaudhery today said that it should happen soon.

Chief Economic Adviser Kaushik Basu also said that the government will be able to move ahead with the economic reforms programme, including FDI in (multi-brand) retail, with some tweaking after the Assembly elections.

"Expectation of FDI in retail led to rise in the retail stocks, bucking the sluggish market trend," Milan Bavishi Research Head Inventure Growth and Securities said.

The decision to increase FDI in single-brand retail business was taken by the Cabinet on November 24, 2011 along with opening the gates for overseas investment in the multi-brand retail sector.

However, the government was forced to put on hold FDI in multi-brand retail due to opposition from several political parties, including the UPA ally Trinamool Congress.

Presently, 51% FDI is permitted in single brand retail business.