Textile stocks continued their upward momentum on Wednesday, buoyed by optimism over a potential trade agreement with the United States, as both countries resumed discussions. The sector has posted gains for three consecutive sessions.
An American delegation led by Brendan Lynch met senior Commerce Ministry official Rajesh Agarwal on Tuesday to revive negotiations that had stalled after five rounds. The talks were described as constructive, with both sides agreeing to intensify efforts towards securing an early, mutually beneficial pact.
Shares of KPR Mills, Welspun Living, Arvind, Gokaldas Exports and Kitex Garments advanced between 2% and 5%. The textile sector has been under strain following higher tariffs, with companies such as KPR, Welspun and Indo Count — which derive between 50 and 70% of their revenue from the US market — among the worst affected after duties were raised to 50%.
Market advisory firm Front Wave Research cautioned investors against focusing solely on immediate market reaction, stressing the need to assess the broader context. The firm observed that Gokaldas Exports had been consolidating between Rs. 1,060 (US $ 12) and Rs. 680 (US $ 8) over the past two years, noting that a weekly close above Rs. 825 (US $ 9) would signal bottom formation alongside a potential trend reversal.
Pearl Global was described as showing the strongest technical setup among peers, having bottomed at around Rs. 1,200 (US $ 14) and now gaining positive momentum. Arvind, meanwhile, has traded in a sideways range of Rs. 400–Rs. 300 (US $ 4-3) for a year, with indicators remaining negative; a decisive close above Rs. 385 (US $ 4) would be necessary to indicate a shift in trend.
On the fundamentals, Front Wave Research pointed out that the textiles sector is currently trading below 15x EV/EBITDA on a trailing twelve-month basis. While short-term sales growth has been encouraging, longer-term revenue performance remains subdued. The sector’s fragile recovery, they said, has been complicated by tariff-related headwinds. However, the firm added that favourable rulings and government incentives could act as catalysts for re-rating.
Concluding its assessment, the firm said both technical and fundamental indicators called for patience in the sector, adding that investors should remain cautious and closely track policy developments and potential momentum triggers before taking an aggressive position.
