Mumbai, Nov. 25: Retail industry stocks sizzled on the stock exchanges after the cabinet cleared a proposal last night to allow 51 per cent foreign investment in multi-brand retailing ventures, piquing investor interest in a sector that has been badly mauled in recent years.

Pantaloon Retail (India) Ltd, famous for its Big Bazaar supermarkets and other formats, leapt almost 17 per cent, or Rs 33.45, to Rs 234.05 even as Kishore Biyani suggested that the Indian retail industry could get between $8 billion and $10 billion in fresh investments over the next 5-10 years.

Elsewhere, Trent from the house of Tatas rose 8.40 per cent to Rs 1,058.45 and Shoppers Stop climbed nearly 6.30 per cent to Rs 395.65.

The cabinet had also removed the FDI cap of 51 per cent on single-brand retail.

Analysts feel that the reform will not only benefit consumers, who will now have a wide array of choice, but also the organised retail sector, which will be able to access more funds from foreign entities.

“The advent of foreign retailers especially in multi-brand retail will address the liquidity constraints of the big Indian organised retail chains faced with dichotomy between store expansion and funding the growth plans in view of the drying-up of fund-raising avenues,” CARE Research said in a report today.

It added that the impact would also be felt in single- brand retailing where foreign brands such as Marks & Spencer’s, Diesel, Zara, and Tommy Hilfiger were present through joint ventures with their Indian counterparts.

Revati Kasture, head (industry) at CARE Ratings, said big foreign brands such as IKEA, GAP would also look to enter India through the setting up of wholly owned subsidiaries. “This in turn would render greater variety of products on offer to the consumers while at the same time scale up the competition among the organised retailers operating in India,” she said.

Market circles said the relaxation would also benefit the real estate industry, which had been battling tough conditions arising from tight credit and high borrowing costs. “Some of the real estate firms will benefit as more foreign retailers come in. This part of the business (organised retail exposure within real estate) could now pick up,” Suman Memani, real estate analyst at PINC Research, told The Telegraph.