Stocks of retail firms slid sharply on Monday as the government put on hold its decision to allow foreign companies to take majority stakes in Indian retail firms.
Shares of Pantaloon Retail India, part of the Future Group and the country?s largest retailer, led the declines by slipping nearly 13% to R186.4 on the BSE. Other major losers included Koutons Retail India (6.5%), Vishal Retail (6.2%) and Provogue India (4.2%). Tata Group?s retail venture Trent and Shoppers Stop fell 3.2% and 2.7%, respectively.
These stocks had posted smart gains on November 25 a day after the Cabinet decided to allow 100% FDI in single brand retail and 51% in multi-brand retail. The move will pave the way for global retail giants such as Wal-Mart, Tesco and Carrefour to gain a firm footing in the country.
However, there has since been strong resistance to the proposal from both the opposition parties as well as some of the allies within the UPA government. The parliament has been adjourned for nine sessions in the winter session over the issue.
According to aCII study, the opening up of FDI in retail could increase the organised retail market size to $260 billion by 2020. This would result in an aggregate increase in income of $35?45 billion per year for all producers combined and an addition of 3?4 million new direct jobs.