India-US Trade Deal: After the agreement on trade deal between India and America, a tremendous rise was seen in the shares of Indian textile companies on Tuesday, February 3. Textile stocks, which were under pressure for some time due to US tariffs, saw strong buying.

During this period, many stocks reached the upper circuit of 20 percent. Shares of many companies including Gokaldas Exports, Welspun Living, KPR Mill and Indo Count Industries rose by 15 to 20 percent.

US President Donald Trump and Prime Minister Narendra Modi announced the trade deal between the two countries through social media late on Monday night. Under this agreement, the tariff on Indian goods in America has been reduced from 50 percent to 18 percent. This announcement completely changed the thinking of investors, due to which there was tremendous buying in the shares of textile companies dependent on the American market.

Which stocks gained the most?

Following the news of the trade deal, major textile stocks like Gokaldas Exports, KPR Mills, Welspun Living, Trident, SP Apparel and Indo Count Industries hit the upper circuit of 20 per cent. Many other textile stocks also saw a rise of 15 to 20 percent, due to which the entire sector came into the focus of investors.

What is special in India-US trade deal?

Under this trade deal, Indian textile and clothing exports to America will now attract a tariff of 18 percent. This tariff is lower than the tariffs imposed on other countries. There is a 20 percent tariff in America on the export of clothes from Vietnam and Bangladesh, whereas for India this rate has been fixed at 18 percent.

Market experts believe that this difference can be a big opportunity for India, because Indian products will now become more competitive in the American market in terms of price.

Why was the textile sector most affected?

After the US announcement of imposing 50 percent tariff on Indian goods, heavy selling pressure was seen in textile stocks. Textile companies are heavily dependent on the American market.

Many companies earn 50 to 70 percent of their total earnings from the American market. This is why investors were worried about the announcement of mutual tariffs and the news of America making trade deals with other countries.

According to analysts, Bangladesh has about 9 percent of the US ready-made garment import market, and Vietnam has about 19 percent, while India’s share has been only 6 percent. Now, with lower tariffs, India’s market share is expected to increase, which may benefit Indian textile companies in the long run.

Relief after recent decline

A sharp decline was seen in textile stocks before the trade deal. Last month, shares of Gokaldas Exports had fallen nearly 17 per cent, while Welspun Living and Indo Count Industries had fallen 6 per cent and 14 per cent, respectively. These stocks got a lot of relief from Tuesday’s rise.