Scrips of other retailers such as Koutons and Vishal also fall between 3-7 % on waning enthusiasm.
Shares of Kishore Biyani-controlled Pantaloon Retail plunged nearly 13 per cent today, amid reports that the government has put on hold plans to open the multi-brand retail industry to foreign supermarkets.
Pantaloon shares fell 12.86 per cent — or Rs 27.50 — to Rs 186.40 on the Bombay Stock Exchange (BSE). Shares of other retailers like Koutons Retail, Vishal Retail and Trent also lost — between three-seven per cent.
The stocks fell amid reports that the Centre had put the proposed opening of retail to FDI in cold storage, said Amar Ambani, head of research at Mumbai-based IIFL.
On November 24, the Union cabinet had cleared 51 per cent foreign direct investment (FDI) in the multi-brand retail sector and had raised the cap on foreign investment in single-brand retailing to 100 per cent from 51 per cent.
However, the decision met with strong resistance from the Opposition, as well as United Progressive Alliance (UPA) allies Trinamool Congress and DMK.
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Anand Rathi Financial Services said it was evident that the decision on FDI in multi-brand retail had got delayed due to mounting political pressure. “It is coming from the Opposition parties as well as the government’s own allies,” pointed out Devang Mehta, its vice-president and head of equity sales. Parliament has been paralysed since the beginning of the winter session on November 22 over many issues, including allowing FDI in multi-brand retail.
Last weekend, West Bengal chief minister Mamata Banerjee, who is head of the Trinamool Congress which is the biggest ally of the Congress-led coalition in the government, said finance minister Pranab Mukherjee had told her the plans to allow FDI in multi-brand retail would be put on hold until a consensus had been reached.
India’s total retail sector is estimated at $590 billion with the unorganised sector accounting for $496 billion. An approval of FDI in multi-brand retail, a politically sensitive issue, would allow global chains like Wal-Mart, Carrefour and Tesco to enter the Indian market and is expected to stimulate investments in logistics and cold chain development.