The BSE Sensex rose for a ninth consecutive session to its highest close since July 2011, as retailers such as Pantaloon and airlines such as SpiceJet surged after the government opened up the sectors to foreign direct investment. After a 200 point surge in the morning trade, the markets trimmed gains during the day after RBI left the lending rates unchanged. Click on the next slide to find out how stocks did post FDI announcement
Kingfisher Even as market remains uncertain as to whether FDI can help beleaguered Kingfisher Airlines, shares of the Vijay Mallya-led carrier rose 20% in trade on Monday -- sharpest among all its listed peers. Analysts say that the rise could on hopes that the company will be able to rope in a strategic investor as reported by the media on several occasions. The airline has also been assuring its employees that once FDI proposal is cleared by the Cabinet, a foreign carrier, who they are already in talks with, will pick up stakes in the carrier.
Jet Airways Compared to KFA and SpiceJet, Jet Airways’s jump was a mere 4%. Analysts say that Jet, which also has around Rs 13,000 crore debt on its books, is better placed in terms of market share -- only a notch below Indigo as per July data. The company is on firm footing and may want to either consolidate or firm up. Chairman Naresh Goyal holds 79.99% in Jet Airways through Tailwinds. He has an NRI status, where 100% ownership is allowed, however, Goyal's investment is via Tailwinds, which is considered FDI by the Indian government. Tailwinds is registered in the Isle of Man. In India, only 49% FDI investment permissible in aviation. Currently, Jet Air needs Rs 1500- 2000 crore for working capital and is in talks with banks to raise funds.
SpiceJet Touted to be the biggest beneficiary of the FDI announcement, SpiceJet stock climbed around 15% this morning. The company is an ideal fit for a foreign investor due to not only its comfortable debt levels but also due to its improving market share and operational efficiencies. SL Narayanan, Group CFO and promoter of the company told CNBC-TV18 that the airline may close an FDI deal by the year end thereby lifting investor confidence.
Pantaloon Retail Pantaloon Retail India surged over 10% in trade on Monday after the government allowed 51% FDI in multi brand retail. Rakesh Biyani, joint managing director of Pantaloon Retail is hopeful that in the span of another six-12 months, we could see the government approving FDI deals.
Trent Trent was trading 7.8% higher at Rs 1172.75. It has hit a fresh 52-week high of Rs 1260 in trade today. CLSA is of the view the retail stocks will react positively in the near term but it also expect this to be followed by a return to underperformance as actual transactions fail to follow through.
Shoppers Stop The UPA stance on retail has already been through muddy water when in December 2011, the government unveiled the same policy, only to back away from it days later. "Therefore, the credit benefit of the announcement can only be recognized when a major multi-brand retailer actually receives all regulatory approvals to invest," Moody's said in a note on Monday.
Hathway Cable Following the announcement on raising FDI cap in broadcasting from 49% to 74&, Hathway Cable and Datacom jumped around 2%.If media reports are to be believed international players, both strategic and private equity, are eyeing the Indian market zealously and perhaps this could have lifted investor sentiments.
Den Networks Den Networks too jumped 2% following the FDI news. It is learnt that top global players Liberty Media, Time Warner Cable and Comcast Ventures are keen to tap this industry, say media reports. This development will certainly help companies meet their goals of equity infusion. Den Networks CEO S N Sharma believes that this policy decision will help consolidation in the sector and allow companies to invest in developing cutting edge products and services for the consumer.
Dish TV Dish TV jumped 7.18%, the highest amongst industry players as the announcement will bring in the much needed investments at a time when the industry is gearing up for digitisation. Analysts say that the entire country needs to go digital by 2014 and rough estimates suggest investments to the tune of 25,000 crore are required. DTH sector for instance has been suffering from losses and it takes long time for companies to break even and require investors with deep pockets.