Textile Stocks Extend Bull Run on India-US Trade Pact Confirmation
Export-focused textile stocks, which have been in a steady uptrend since the trade deal announcement last week, extended their bull run on Monday, February 9, after the confirmation of an interim India–US trade pact. This agreement has significantly boosted investor sentiment, leading to substantial gains across the sector.
Stock Performance Highlights
Gokaldas Exports led the pack, with its share price gaining as much as 5.60% to ₹826.25 apiece. Other major players like Vardhman Textiles, Welspun Living, and KPR Mills saw their shares rally by 3%. Additionally, stocks such as Trident rose nearly 2% to ₹28.21 in trade today.
In just one week, textile stocks have zoomed up to 40% amid trade deal optimism. Gokaldas Exports' stock has emerged as the biggest gainer, soaring 42%. Welspun Living, KPR Mills, Vardhman, and Trident have gained up to 19%, reflecting increased investor interest in the segment.
Why Are Textile Stocks Rallying?
The rally is driven by the interim trade pact between India and the United States, which lowers tariffs on textile exports. Under the agreement, the United States will apply a reciprocal tariff rate of 18% on originating goods of India, including textile and apparel, as stated in a joint White House statement over the weekend. This marks a reduction from the earlier 25% tariff, as announced by US President Donald Trump last week.
This new tariff structure is expected to enhance India's competitiveness in global textile supply chains. The US continues to be the biggest destination for India’s textile exports, and the lower tariffs eliminate previous disadvantages for Indian exporters, giving them an edge over competitors such as Bangladesh (20%), China (30%), Pakistan (19%), and Vietnam (20%).
Impact on Exports and Industry Outlook
In the last financial year, India exported textiles worth $8.3 billion to the US, accounting for 9.6% of total exports to the nation. In the ongoing financial year, exports as of November stood at $5.1 billion. The Ministry of Textiles noted that this change is likely to influence and reshape global buyers’ sourcing strategies.
Anil Rego, Founder and Fund Manager at Right Horizons PMS, commented, “For textiles, the impact is particularly significant given that the US is one of the largest end markets for Indian apparel and home textiles. Reduced tariffs enhance price competitiveness against peers such as China and Bangladesh, potentially leading to order diversion in India’s favour. Higher volumes, better capacity utilisation, and operating leverage could gradually translate into margin recovery and more stable earnings for exporters.”
Key Beneficiaries and Future Prospects
Harshal Dasani, Business Head at INVasset PMS, highlighted specific beneficiaries: Gokaldas Exports stands out as a direct play on US apparel demand, while Pearl Global Industries offers leverage to garment exports with improving scale. In home textiles, Indo Count Industries and Welspun Living are well-positioned due to their long-standing US retailer relationships and ability to absorb volume growth.
Dasani added, “Meanwhile, integrated players such as KPR Mill could also benefit, supported by supply-chain control and operating efficiency, though outcomes will remain sensitive to cotton prices and demand recovery.”
The trade agreement is seen as crucial in helping India reach its export goal of $100 billion by 2030, with the US expected to account for over one-fifth of the target. It is anticipated to give a necessary push to the sector, improve cost competitiveness, and support supply chain diversification by allowing the textile industry to source intermediate inputs from the US.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
