The market was hoping that with the Presidential polls out of the way now, the Government of India would initiate big ticket reforms such as FDI in retail, reforms in the insurance sector, unlocking control over diesel price, etc.
But these hopes suffered a jolt with a key ally Samajwadi Party joining hands with the Left Front and JD(S) to urge the Government not to open up the retail sector anymore. This sent the retail stocks scurrying for cover in the morning trade on Monday, though by close, many had recovered partially from their losses.
The overall weak market sentiments only added to the selling spree the counters witnessed with one retail stock slumping to its 52-week low today.
Knocked down
Pantaloon Retail which had rallied after announcement of significant stake sale to the Aditya Birla group company and on the back of the expectations that the retail sector would be opened up for foreign direct investment took a serious knock accompanied by a huge volume of trading.
The stock shed Rs 15.20 or eight per cent to close at Rs 174.90 accompanied by a colossal trading volume of about 57 lakh shares. The stock only made a mild recovery before close from the day’s low of Rs 173.35 on the NSE. On the BSE, the stock has slumped from a high of Rs 203.20 a month ago to a low of Rs 173.70.
The stock, which had hit the 52-week low of Rs 124 on May 18 this year, had made significant recovery after it was announced that the Aditya Birla group would be making investment of about Rs 800 crore in the company. Hopes over relaxation of rules governing FDI in retail also gave a positive spin to the stock.
Pantaloon Retail (India) Ltd had also early last month made an allotment of 81,63,265 shares of Rs 2 each at a premium of Rs 243 a share to Bennett, Coleman & Co Ltd, amounting to about Rs 200 crore.
Others join slide
Shoppers Stop Ltd was another retail stock to suffer sliding by Rs 18.55 to Rs 366 in the NSE at the close. A strong player in the retail segment, Trent Ltd, belonging to the Tata Group, too shed some value. The stock was down by Rs 23.80 to close at Rs 1057.
Kewal Kiran Clothing Ltd shed Rs 33.35 to close at Rs 504.95 on the NSE. During the day, the stock slumped to its 52-week low of Rs 485.35 but recovered at the close. Apart from the overall market sentiments, the weak Q1 results of the company in the current fiscal may have weighed in with the investors.
The company, which owns apparel brands such as Killer, Easios, K-Lounge etc had witnessed a near 20 per cent erosion in sales in Q1 of this year compared to the same period last year and the net profit too was sharply down. Koutons Retail slipped to Rs 9.30, down by 55 paise.
But even after the sharp correction these stocks had witnessed, their P/E is not low.
For instance, Pantaloon Retail trades at a P/E of 109.88, Trentis trading at a P/E of 78.55 and Shoppers Stop’s P/E is 50.07. Only Kewal Kiran, among the high value retail stocks, trades at a lesser P/E.
ryn@thehindu.co.in