The decision will be a game-changer for the estimated USD 590 billion (Rs 29.50 lakh crore) retail market dominated by neighbourhood stores.

Cheering the news, shares of Vishal Retail skyrocketed by 18.83 per cent to an early peak of Rs 22.60, while Pantaloon Retail India jumped by 17.12 per cent to a high of Rs 234.95 and Shoppers Stop climbed by 14 per cent to Rs 424.70 on the BSE.

In addition, Trent rose by 11.57 per cent, Koutons Retail advanced by 14.28 per cent and Provogue (India) surged by 14.92 per cent in morning trade.

In a major decision, the government yesterday approved 51 per cent FDI in multi-brand retail, paving the way for global giants like WalMart to open mega stores in cities with a population of over one million.

Previously, no FDI was allowed in multi-brand retail, while 51 per cent was allowed in single-brand retail. However, 100 per cent FDI was allowed in the wholesale cash-and-carry business.