I am doing translation of my plugin. I am using __ & _e in php files. But can't figure out how to do same for readme.txt file? Is it's content on Wordpress site's plugin page automatically get translated using Wordpress translation dictionary once plugin adds code for loading textdomain?
Translations for readmes on .org are done through https://translate.wordpress.org. You could contribute translations for your own plugin if you wanted. Start by picking a locale/language you want to translate into, search for your plugin, and select the Readme Sub Project.
You don't need to do anything special to the readme itself.