India-UK FTA: Even as the Indian stock market bled in trade on Friday amid selling by foreign investors and subdued Q1 earnings season, several stocks from textiles, automakers, leather, footwear and seafood emerged as gainers.
These stocks defied the stock market crash to gain up to 17% boosted by the India-UK free trade agreement (FTA).
Leather and footwear-related stocks were among the top gainers, following a reduction in duty from 16% to zero. Mirza International share price rallied 17% to ₹38.52 apiece on the BSE even as the index cracked over 0.85%.
Superhouse soared 7.35%, AKI India jumped 5% and Zenith Exports gained nearly 3% in intraday trade today. From the footwear pack, Metro Brands jumped 5% while companies like Bata India and Khadim India traded less than 0.50% down despite the crash in the Indian stock market.
Textile stocks emerged as other top gainers following the removal of import duties on Indian textiles. Trident share price jumped almost 7% while Filatex gained 6.5%. Sanathan Textile and TCNS Clothing were among other gainers, rising up to 3%. Meanwhile, Welspun Living stock climbed 2%.
Exporter of diamond-studded jewellery, Goldiam International gained marginally in the trade today, while Senco Gold also eked out mild returns before trading marginally lower amid a strengthening selloff on Dalal Street.
Apex Frozen Foods was another top gainer as it soared 4% to ₹259.60 on the BSE today as CETA eliminated UK tariffs on India’s marine products.
India-UK FTA: Implications for Indian stock market
The FTA signed by the fifth and the sixth largest economies covers a wide range of sectors and is expected to boost bilateral trade by around $34 billion annually.
The FTA will cut tariffs for various British imports, while 99% of Indian exports to the UK would see duties eliminated to zero, including for segments like textiles, leather goods, agri products, medical devices and drugs.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said the India-UK FTA, which is India’s first comprehensive trade agreement with a major developed country, has two implications from the market perspective.
One, this FTA will significantly boost trade between both countries, which will be seen as a positive by the market, Vijayakumar said. Two, this FTA, along with many other FTAs signed by India with other countries, projects India as a nation committed to free trade, he opined.
The fact that this FTA has come during a time of tariff wars is commendable, and hopefully this will improve India’s chances of striking a fair-trade deal with the US, he added.
Although the FTA is a positive for India, analysts believe the market is unlikely to see any major upside until there is clarity on US trade negotiations.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
