Retail stocks strengthen after government notifies FDI in the sector

Retail stocks are trading with traction after the government braved intense political opposition to notify rules for allowing foreign retailers such as Walmart and Carrefour to set up stores in India on Thursday.

Shoppers Stop is currently trading at Rs. 393.10, up by 12.90 points or 3.39% from its previous closing of Rs. 380.20 on the BSE.  The scrip opened at Rs. 392.70 and has touched a high and low of Rs. 398.45 and Rs. 385.15 respectively. So far 48299 shares were traded on the counter.

Pantaloon Retail (India) is currently trading at Rs. 186.30, up by 11.60 points or 6.64% from its previous closing of Rs. 174.70 on the BSE. The scrip opened at Rs. 180.20 and has touched a high and low of Rs. 195.00 and Rs. 180.20 respectively. So far 1605741 shares were traded on the counter.

Trent is currently trading at Rs. 1132.00, up by 40.80 points or 3.74% from its previous closing of Rs. 1091.20 on the BSE. The scrip opened at Rs. 1125.10 and has touched a high and low of Rs. 1148.00 and Rs. 1106.05 respectively. So far 4829 shares were traded on the counter.

Braving the intense political opposition and a nationwide bandh called by the opposition parties and some of its allies, the government showed its hard stand and notified the decisions taken last Friday, related to FDI in retail and aviation sectors and permitting greater foreign investment in some sections of the broadcasting sector. These notifications have given effect to the decisions taken by the Cabinet, putting an end to speculation about a possible roll back of its decisions.

Earlier, the government amid widespread protests from within and outside decided to allow 51 per cent foreign direct investment (FDI) in multi-brand retail, 100 per cent FDI in single-brand retail and 49 per cent FDI each in the civil aviation and power sectors.

After the most contentious 51% FDI in multi-brand retailing getting notification, multinational retailers such as Walmart and Carrefour can invest up to 51 per cent to open stores in 10 states and UTs which, till date, have agreed to implement the decision, as the decision comes with an enabling clause asserting that State governments/Union Territories would be free to take their own decisions in regard to implementation of the policy and is subject to the concerned State government’s approval. The policy further prohibits retail trading through e-commerce by companies with FDI engaged in multibrand retailing.