Aviation and retail stocks were the biggest gainers in a broad rally Monday. The strong buying in these stocks came after the government announced the opening up of the retail and airlines sector to foreign investment on Friday. These moves show that the government is serious about fiscal consolidation and encouraging investment.
The government decision to allow foreign airlines to buy up to 49 per cent stake in local carriers will provide a fresh source of funding to India's debt laden airlines.
Ailing Kingfisher Airlines, which was India's second biggest carrier a year ago but has since grounded most of its fleet, has lobbied hard for this move on hopes that it can attract a foreign airline investor, although none has publicly expressed interest. Shares in Kingfisher Airlines were locked up, rising 20 per cent at Rs 12.97.
Kingfisher, whose fortunes hang on its ability to raise funds soon, said the move will allow it to re-engage with prospective investors in a "more meaningful manner."
Budget carrier SpiceJet, the fourth-largest of India's six main airlines soared 18 per cent at Rs 40.85. The company had said on Thursday it was in initial talks with several Gulf carriers and was waiting for the government to ease rules before it takes a final call.
The decision to open retail sector to foreign supermarkets has been stalled for months because of political gridlock. Retail stocks also saw strong buying despite the government has left the decision to allow foreign supermarket chains to set up shop on individual state governments,
Pantaloon Retail surged over 20 per cent at Rs 189.90. Shopper's Stop traded 14.3 per cent higher at Rs 412, while Trent surged 12 per cent to Rs 1,221.95.
(With inputs from Reuters)
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