Trump’s additional 25 per cent tariff likely to weigh on export-oriented shares in near term

The effect of the additional tariff was felt by textile stocks on Tuesday. Shares of Welspun Living, which derives 60-65% of its revenue from the US market, fell another 2% on Tuesday.

Similarly, shares of Vardhman Textiles, Arvind Ltd, Alok Industries, Gokaldas Exports crashed between 2% and 4% on Tuesday. Jewellray stocks too underperformed which shares of Titan, Kalyan Jewellers, Rajesh Exports and Goldiam International plunging sharply on Tuesday.

SBI Research in a note stated that there will be 50% tariffs on $45 billion worth of major Indian exports and sectors such as textiles, and gems and jewellery are expected to face moderate pressures. However, pharmaceuticals, smartphones and steel are relatively insulated due to exemptions, existing tariff structures and strong domestic consumption.

VK Vijayakumar, Chief Investment Strategist, Geojit Investments said that even though a 50% tariff is unlikely to significantly impact India’s growth, there will be an adverse impact on India’s exports and loss of jobs in labour-intensive sectors like textiles, gems and jewellery and leather.

“The sentimental impact of this development will be negative from the market perspective. FII selling, too, can impact the market. Domestic consumption segments like financials, telecom, aviation, hotels, cement and segments of capital goods are better placed to withstand the adverse headwinds,” stated Vijayakumar.