Fitch downgrades Indian retail

Dark clouds of slowdown have started hurting the retail sector forcing Indian Ratings, a Fitch Group company, to maintain a negative outlook on the Indian retail sector for 2013. HT reports.

Dark clouds of slowdown have started hurting the retail sector forcing Indian Ratings, a Fitch Group company, to maintain a negative outlook on the Indian retail sector for 2013.

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This is driven by waning consumption owing to rising inflation and other macroeconomic factors.

"While the overall revenues look positive till now, there are palpating signs of a slowdown," said Deep N Mukherjee, director, corporates, India Ratings & Research. "There is a continuous weakness in consumer spending, marginal real wage growth and a weak macroeconomic environment."

Meanwhile, the opening up of the foreign direct investment (FDI) in the multi-brand retail will receive another setback.

Most foreign retailers who have been keen on making investments in India will now wait for not just 2014-elections but a positive economic environment.

"FDI-based equity infusion is a theoretical possibility. Most Indian companies are cash rich and there is a possibility that equity from domestic investors may drive deleveraging of existing players," said Mukherjee.

According to India Ratings, the trend in private final consumption expenditure (PFCE) is even more worrisome.