Retail shares retreat on FDI Bill worry

Moneycontrol Bureau

A majority of retail stocks slipped at the end of the Tuesday's session on the BSE led by Trent (opening: Rs 1, 239; closing: Rs 1,210) and Shoppers Stop (opening: Rs 445; closing: Rs 427). Surprisingly, retail giant Pantaloon (opening: Rs 231.05; closing: Rs 230) did not register a significant fall as expected. Overall, the retail stock segment beat a retreat in reaction to the debate initiated by the Leader of Opposition in the Lok Sabha Sushma Swaraj on Tuesday on FDI in multi-brand retail.
Earlier, the UPA government has said it was confident of its numbers in the Lok Sabha, holding sway in the debate on foreign direct investment (FDI) in multi-brand retail. The motion for the modification of Foreign Exchange Management Act (FEMA) notification, which was tabled in the Lok Sabha on November 30, will also be taken up along with the debate on FDI. FEMA rules have to be approved by the Lok Sabha to facilitate FDI in retail.
Adding fuel to the Opposition's demands, Trinamool Congress leader Saugata Roy and National Conference leader Hassan Khan moved counter motions against a debate calling for the the government notification of the FEMA rules.
Stock-market SP Tulsian of sptulsian.com adds, "The situation remains the same as expected which was that probably the government would have an upper hand. The Speaker"s ruling the debate on FDI will include the discussion of the modification of FEMA  rules and voting separately will have the same effect. I think the situation remains slightly in favour of the government."
Both the Samajwadi Party (SP) with 22 MPs and Bahujan Samaj Party (BSP) with 21 MPs in the Lower House have yet not clarified their position on the FDI issue, but the government expressed hope that the two parties would support FDI in retail, either in the form of a positive vote or an abstention to help the UPA scrape through. Also Read: FDI not in interest of country: Samajwadi Party
BSP chief Mayawati had said her party would decide on the vote on the floor of the House but also said her party would not go with the "communal forces" (read BJP), hinting she would support the government on the issue.
Portfolio manager PN Vijay of askpnvijay.com comments, "I think its sensible to have a combined discussion on FEMA with separate voting because Section 48 and 51-percent are regarding the same issue. The bigger issue is what happens in the Rajya Sabha. The government has the numbers in the Lok Sabha.
Any legislation passed in the Lok Sabha becomes the law because the Lok Sabha is the House of the elected people. So, this is the made the government appear very confident and the markets are reacting in tandem. I guess by Wednesday  evening, a clearer picture will emerge.”
With inputs from agencies