Vishal Retail, Pantaloon and Shoppers Stop lose 5-10% on a day when the Sensex rose 471 pts.
S hares of retail majors witnessed a sharp fall on Monday as it emerged that the sensitive issue of allowing foreign direct investment (FDI) does not enjoy political unanimity. Most of the sector heavyweights ended the day in the red, even as the benchmark indices posted their biggest single-day gain in three months.
Sector majors, including Vishal Retail, Pantaloon, Shoppers Stop and Trent, all lost ground as opposition parties stalled the proceedings in Parliament even as the ruling Congress went all out to woo all the other political parties. Further, at least three state governments have made it clear that the policy in its current form cannot be accepted, as it will kill the small and unorganised retailers. On Wednesday, the government gave its go-ahead for allowing 100 per cent FDI in single-brand retail and up to 51 per cent in multi-brand.
On Bombay Stock Exchange, Vishal Retail led the fall, shedding nearly 10 per cent to close at Rs 20.35. The stock had surged 30 per cent in the previous two trading sessions. Shoppers Stop ended the day down 7.15 per cent at Rs 367.35. Pantaloon Retail lost a little under five per cent, to end at Rs 223.35. Meanwhile, the benchmark 30-share Sensex gained over three per cent —its biggest percentage gain since August 29 —or 471.7 points to close at 16,167.13.
Analysts are of the view that retail stocks lost ground on an otherwise strong session only on account of the political uncertainty surrounding the whole issue. “Retail stocks, which had rallied on Friday after the Cabinet approved FDI in the sector and lost ground on Monday as the ruling government is facing stiff resistance from the opposition and a section of its coalition,” said Alex Mathews, research head, Geojit BNP Paribas Financial Services.
Meanwhile, Parliament proceedings were stalled on Monday as representatives from the Opposition jointly held up the House seeking a debate on the issue of 51 per cent FDI in retail. BJP member Murli Manohar Joshi, who had given an adjournment notice to discuss government’s policy on FDI, insisted that the issue be taken up immediately. He was supported by Sharad Yadav (JD-U) and other NDA members. Left parties are also demanding a discussion on the issue.
In states ruled by the BJP, discussions are on whether accepting and implementing FDI in retail will help or hinder the governments. So far, no one view has emerged in the party. Tamil Nadu chief minister Jayalalithaa has also said she would not allow hypermarkets in her state. She is the second chief minister after Mayawati of Uttar Pradesh to oppose the government’s move on opening the retail sector. Political leaders of Gujarat have also said the FDI policy will not only dislocate the small and unorganised retailers but also result into unemployment.
