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Retail stocks gain ahead of FDI test in Parliament

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Retail stocks saw buying interest on Tuesday ahead of a key discussion on allowing Foreign Direct Investments or FDI in multi-brand retail in Lok Sabha. The discussion will take place under a rule that entails voting.

Shares in Pantaloon Retail traded 1.25 per cent higher at Rs 233.60 in a flat market at 11.15 a.m.. Pantaloon is among the biggest retail chains in the country. The broader Sensex and Nifty were up 0.1 per cent.

Shares in Trent, promoted by the Tata group gained 0.3 per cent to Rs 1,240.50. Smaller names like Koutons surged 3 per cent while Cantabil traded 2.5 per cent higher.

The vote in both Houses is a symbolic one, but a loss could adrenalise the Opposition's demand for a rollback of the reform, and severely undermine the authority of the Prime Minister whose government shrank to a minority in September when key ally Mamata Banerjee and her Trinamool Congress exited the ruling coalition over the decision to allow 51 per cent FDI in retail.

The government, which enjoys the support of around 265 MPs in the 545-member Lok Sabha, can go pass the half-way mark of 273 with the support of Samajwadi Party (22) and BSP (21).

The UPA does not have the numbers on its own in the Upper House, which has an effective strength of 244. Along with its allies, the UPA has a strength of 94 members. The 10 nominated members may go ahead to vote with the government. Among the seven Independents, three or four may support the government. Still, the ruling coalition may have to persuade outside supporters BSP (15) and SP (9) to vote with the government.

Critics say that allowing foreign players into the $450 billion retail sector will destroy the livelihoods of millions of small store owners. The government says the move will increase revenue and help eliminate chronic food wastage by setting up proper cold chain and transport infrastructure.

Bills to allow greater foreign direct investment (FDI) in the insurance and pension sectors are unlikely to come up for a vote while the stand-off over retail reform continues.
 


(With inputs from agencies)

Story first published on: December 04, 2012 09:50 (IST)

Tags: FDI in retail, Pantaloon, Trent

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