In a relatively steady market session on Tuesday, stocks of Indian companies that stand to gain from the proposed India-European Union trade agreement witnessed significant price rallies. Conversely, shares of firms that might face heightened competition from European counterparts experienced notable declines, reflecting investor sentiment about the deal's potential impact.
Seafood Exporters Lead the Gains
Apex Frozen Foods, a prominent shrimp exporter from India, saw its stock price jump nearly 12%, while Avanti Feeds, another key player in the seafood industry, closed 2.1% higher. Market analysts attribute this bullishness to the lucrative opportunities the trade deal could unlock for Indian seafood exporters in the European market once it becomes effective.
Gems and Jewellery Sector Gets a Timely Boost
Beyond seafood, auto ancillary and gems & jewellery exporters are also expected to benefit from the agreement. For the gems & jewellery industry, this development comes as a much-needed relief, especially at a time when exporting to the United States—one of their largest markets until recently—has become increasingly challenging.
According to Colin Shah, Managing Director of Kama Jewelry, the India-EU trade agreement appears promising and could provide significant relief to India's gems & jewellery sector amid current trade dynamics with the US. "This strategic diversification of Indian exports will help revive the sheen of the gems & jewellery trade, which has been on a decline for months, with occasional spikes in between," Shah remarked.
Automakers and Wine Producers Face Headwinds
On the flip side, sectors like automakers and wine producers are among the probable losers from the deal, as they brace for increased competition from European companies. Among leading passenger vehicle manufacturers, Mahindra & Mahindra (M&M) lost 4.2%, while Hyundai Motors India was down 4%.
Sula Vineyards closed 3.4% lower, with market players expressing concerns that the company could face stiff competition from European wine makers once the trade deal is implemented.
Market Implications and Future Outlook
The stock movements underscore the market's anticipation of the trade deal's effects on various industries. While export-oriented sectors like seafood and gems & jewellery are poised for growth, domestic industries vulnerable to European imports are experiencing pressure. Investors are closely monitoring these developments as negotiations progress, with the potential for further volatility in related stocks.
