Home Retail Bull run would boost retail sales say analysts

    Bull run would boost retail sales say analysts


    The bull run which saw the sensex touching a record 20,000 mark has not impacted on the shares of retailers listed on the stock exchange but it would boost earnings of the organized retail sector as it has put money into the pocket of consumers, say analysts.

    The shares of those retailers listed on the (BSE) have not shown the kind of increase in their prices like those of Reliance, Larsen and Tubro, and seven others who between them contributed to the index points touching 10,000.

    “The sensex shooting up is a positive sign for the retailers as it has brought about a feel good factor among the consumers who would have more money to spend,” said Ashu Madan of Religare.

    “The rise in sensex at least gives the consumers a notional feeling of having money to spend and once your purchasing power increases, it does boost the profits of the shop keepers which in the present situation would be the retailer,” Madan told indiaretailing.com

    “The sensex crossing 20,000 mark is a positive sign for the retail sector as it would put into circulation more money since the consumer would have made good on the stock market,” Bijou Kurien of told indiaretailing.com

    Echoing similar views, Subir Gokarn, Chief Economist at CRISIL, told indiaretailing.com “it would stimulate spending and thus increasing the earning of the organized retail as many of the investors are from the upper strata. This bullrun has put more money into their pocket.”

    He said this would indirectly enhance the income of those employed in this sector specially in the large retail stores who have a large staff.

    The indices showed that it was capital goods index which showed a tremendous increase gaining almost 200 per cent in the period between June 16 last year to October 29 while Fast Moving Consumer Goods (FMCG) was at the bottom registering an increase of just 21 per cent during this period.

    Besides FMCG, shares of Auto and Healthcare too were way behind recording a gain of only 26 and 29 per cent respectively.

    Even though the shares of retail giants like and Pantaloon did not register the kind of rise like those of capital goods, but the forecast that retailers would stand to benefit from the bull run is definitely encouraging for them.

    As one analyst said retail is a new area and so people are hesitating to put money in the shares though they are not hesitant to spend money at the retailers.

    Another factor was that the money coming into the stock exchange was from Foreign Institutional Investors (FII) who invariably put money into those sectors which reported good earnings like SBI and Larsen and Tubro.

    As Arun Kejriwal of the Kejriwal Research Information Services said “this shows that there is more of speculation and people including those in the retail segment, are investing because they don’t want to be left out from the rally that they see happening.”

    Sri Krishna