The shares of textile companies continued to recorded significant losses for the second consecutive session on August 1. This comes after the US President Donald Trump announced 25 percent tariff and an additional penalty on India, rattling the export-oriented stocks.
Bangladesh has secured a trade deal with US, agreeing on 20 percent export tariff. This is significantly lower than the 37 percent initially proposed by the US President. This further fuelled the downturn in the stocks, as Indian textile exports will now face higher tariffs on exports than their rivals from Bangladesh.
Gokaldas Exports shares dropped more than 4 percent to trade at Rs 814 in the afternoon. The stock has now declined nearly 9 percent over the two days. Notably, nearly 70 percent of the company’s topline comes from the US market.
Indo Count Industries, which has a similar exposure to US market, saw its shares price decline more than 4 percent. The stock has dropped around 8 percent so far. Welspun Living and Vardhman Textiles shares also declined 4 percent each, while Pearl Global Industries shares plunged more than 6 percent.
Trident shares declined more than 3 percent, while KPR Mill shares dropped up to 6 percent each. Among the smallcap stocks, Credo shares declined 20 percent to hit the lower circuit.
Notably, Indian textile players compete with rivals in Bangladesh, Vietnam and China.
"Investors will reassess their strategies with a mix of caution and optimism after the tariffs and penalties imposed on Indian goods," said Utsav Verma, head of research at Choice Institutional Equities.
"Sectors like textiles, pharmaceuticals and automotive components are likely to be most impacted and may see reduced investor interest in the short term," Verma said.
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