Continuous uproar in Parliament over the cabinet decision to allow foreign direct investment (FDI) in multi-brand retail is proving a dampener for stocks of companies in the sector. On a day when the benchmark indices lost one per cent of their values, the fall in retail stocks was much more.
Sector's majors Vishal Retail, Pantaloon, Shoppers Stop, Trent and Koutons continued to lose recent gains as both opposition parties and the government's allies objected to the decision, leading to adjournment of the Parliament session for all of on Tuesday.
Kishore Biyani’s Pantaloon Retail took the biggest hit. Its shares plunged 12 per cent to close at Rs 196.80 on the Bombay Stock Exchange. Those of Koutons saw erosion of 7.3 per cent, while those of Trent, Vishal and Shoppers Stop were down between one and four per cent.
Markets experts say the stiff political resistance is adding to uncertainty. Despite the government's stand of not going back on the, the pressure has intensified on sector companies' shares. Yesterday, when the benchmark indices rose the most in three months, retail stocks bled. There has been more bleeding on Tuesday. Pantaloon ended with 18 per cent of its value eroded from the earlier high of Rs 239. Vishal and Shoppers Stop declined 16 per cent (see table).
According to fund mangers, unless certainty on the issue emerges, retail stocks are likely to remain in the doldrums.
