After state elections, the government may open multi-brand retail too, expect analysts.
Heavily-punished retail stocks made a bounce- back on Wednesday after the government notified 100 per cent foreign direct investment (FDI) in single-brand retail. Benchmark indices traded flat, while shares of retail companies jumped between four per cent and 10 per cent. Some retail counters rose as high as 18 per cent.
Koutons Retail emerged the largest gainer, as its shares gained 9.87 per cent on the Bombay Stock Exchange (BSE) to close at Rs 19.92. Provogue gained 7.72 per cent to Rs 26.50.
Kishore Biyani-owned Pantaloon Retail rose over 10 per cent, but pared gains by the end of trading session and closed at Rs 152.55 a share, up 4.06 per cent. Shares of Shoppers Stop gained 4.85 per cent to close at Rs 303.45. Industry analysts said the government’s move on FDI had bolstered hopes that the same move would come to multi-brand retail, too.
According to a head (equity) at a domestic brokerage house, all retail stocks bled after surging when the FDI decision remained in limbo late last year after “so much” of talks. “We had anticipated some bounce back. The latest step has brought the desired rally,” he added. Analysts maintain the rally should sustain this time, but do not see any further trigger till elections are over. “Yes, hopes for FDI in multi-brand retail are alive, but it is likely to come only after elections,” said a retail sector analyst at a Mumbai-based brokerage.
It was in November last year that the government decided to increase FDI in single-brand retail — along with the move to open up the gates for FDI in multi-brand retail. However, the government was forced to put the plan on hold, following opposition from several political parties, including the ruling UPA’s own ally, the Trinamool Congress.