Amazon, Walmart shares may decline further in near term

Stock prices of Amazon and Walmart, which slumped on Friday over the new Foreign Direct Investment (FDI) norms for e-commerce in India, are likely to decline further in the next few days, analysts said.

On Friday, shares of Amazon on the Nasdaq stock exchange fell 5.38 per cent to $1,626.23 per share, while Walmart on the New York Stock Exchange (NYSE) ended 2.06 per cent lower at $93.86.

"The impact will be there for the next few days," said Deepak Jasani of HDFC Securities.

However, analysts are of the view that both suppliers and consumers will get used to the new policy environment.

The two companies put together lost market capitalisation of $50 billion. Amazon lost market capitalisation of over $45 billion on Nasdaq, while Walmart lost over $5 billion on the NYSE.

The market cap of Amazon was at $798.81 billion at the end of Friday's trade while that of Walmart was at $272.69 billion.

The slide in the two e-tail giants assume significance as India is viewed as a major foreign market for future growth and expansion for the two companies. Currently, the market has captured the interetst of not just American multinationals but those from China as well.

The dampening of investor sentiment can be attributed to the disruption caused in their e-commerce operations in India after the new FDI norms for the e-commerce sector came into effect last Friday, February 1 which prohibit the online retailers from mandating any company to sell its products exclusively on its platform.

In the new policy, the Commerce Ministry also noted that the online retail firms will not directly or indirectly influence sale price of goods and services and will maintain level playing field.

Amazon India had to pull out many of its products and they were listed as "currently unavailable" as the new norms prohibit the e-tailers from selling products of companies in which they have stakes.

Both Amazon and Walmart had sought an extension of the deadline for the new norms, but the government rejected the demand and the norms came into effect on February 1.

Although major stakeholders led by Walmart and Amazon had sought a six-month extension, other players like Snapdeal and offline traders led by the Confederation of All India Traders supported the government's move.

--IANS

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