Shares of retail stocks got a regulatory boost on Wednesday after the government announced easier foreign investment norms for the sector. Stocks of retail brands like Monte Carlo Fashions, Zodiac Clothing and Indian Terrain saw big spikes–gaining as much as up to 10% in intra-day trade. Indian Terrain closed 6% up at Rs 232.95 (its highest level in three months), while Zodiac Clothing closed with a gain of 1.76% after touching a 52-week high of Rs 254. Other retail stocks such as Trent, Avenue Supermarts, Shoppers Stop and Future Enterprises too gained between 1% to 5%.
Traded volumes at the counters also shot up on Wednesday. Zodiac Clothing Company witnessed over 4.5 lakh shares changing hands on the bourses, which is 26 times more than its three-month average volume. Monte Carlo Fashions and Indian Terrain Fashions saw their volumes surge 9.5 times and 4.2 times of three month average volume. The move is largely seen benefitting new entrants into the country and those present through joint ventures and franchise agreements. Nevertheless, it opens up scope for more capital infusion into the sector.
At present, FDI investment up to 49% is allowed via automatic route but any investment beyond the limit requires government approval.