Avalon Technologies, Avanti Feeds & KPR Mill hit 20% upper circuit levels; here's why

Shares of Avalon Technologies Ltd, Avanti Feeds Ltd and KPR Mill Ltd touched their respective 20 per cent upper circuit levels in Tuesday's trade. The sharp rally came after an India–US trade deal reduced reciprocal tariffs on Indian goods to 18 per cent from 25 per cent.

With the India–US deal finally materialising, KPR Mill, a textile player, is expected to benefit as it removes a key sectoral overhang. Avalon Technologies has a significant portion of its revenue linked to the United States, while Avanti Feeds is a major exporter of frozen shrimp to the US.

Commenting on the India-US trade development, Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, said, "After months of negotiation, the trade deal between the US and India was finally announced. The specifics are yet to be known, but prima facie, the 25 per cent additional (Penal) tariffs will no longer be levied for buying Russian Oil. The reciprocal tariff will be slashed to 18 per cent instead of 25 per cent. We believe that this is a great boost for the already sombre sentiments as Indian goods will now be able to compete on the US soil. However, one must also remember that exports to the US are a small part of our $4 trillion GDP. So yes, the trade deal is good for the economy and markets in the short term, but one must not expect miracles out of it. The market is expected to gap up higher as there are many short positions in the system, which will get squared off. But we must look for fresh long built up for the trend to sustain."

Meanwhile, sentiment also received support from the announcement that India and the European Union (EU) have entered into a free trade agreement (FTA), which had been under negotiation for more than a decade.

Highlighting its impact on the textile sector, Elara Capital said, "The FTA, after it becomes operational, will eliminate import tariffs to zero on Indian textiles and apparel products. This provides critical relief to Indian textile exporters that currently face 10-12 per cent duties in the EU, placing them at a significant disadvantage compared with Bangladesh, Turkey, Vietnam and Pakistan that enjoy zero-tariff access."

In addition, Divam Sharma- Co Founder and Fund Manager at Green Portfolio PMS, stated, "Textiles and apparel stand to gain significantly from the India–US trade deal, as the US absorbs nearly one-quarter of India's textile exports and is also a major cotton supplier. Given intense competition from low-cost producers like Bangladesh and Vietnam, lower US tariffs would narrow price gaps, improving India's competitiveness and boosting large exporters that cater to mid-priced US retailers."