India Ratings & Research (IRR) has maintained a negative outlook on the retail and construction sectors for the second half of 2013.

While persistence of negative real wage growth and deteriorating of household finances are expected to further hurt the retail sector; execution and liquidity challenges will likely hit the construction sector.

In its latest report, India Ratings cautioned that the impact of the aforementioned challenges would likely further intensify in the near term.

For the construction sector, the agency said, "Delays in obtaining statutory clearances and increasing working capital needs continue to put pressure on the financial profile of the companies in this sector."

It added that governmental policy actions to address the issues hindering quick execution of construction works and better availability of liquidity would have a encouraging impact on the industry.

The agency also noted that the retailers, on the CAPEX front, are looking at profitable and moderate growth of under 10 per cent in financial year 2014, as compared with the range of 15-30 per cent witnessed in the past 2-3 years.

The government has opened the country's multi-retail sector for foreign direct investment (FDI), but foreign investors are losing interest in the sector due to several regulatory hurdles. The recent cases of alleged questionable practices, under the government's Foreign Corrupt Practices Act, are expected to further inflate the challenge of attracting foreign investment in sectors like retail.