US Trade Talks Boost Textiles, But Rally May Be Premature, Says SEBI Analyst

Textile stocks continued to gain ground on Wednesday, led by optimism over a potential trade deal with the US as both countries resumed talks. The sector has been seeing gains for the past three sessions. 

An American delegation led by Brendan Lynch met with senior Commerce Ministry official Rajesh Agarwal on Tuesday to revive negotiations that had stalled after five rounds. The discussions were described as positive, and both sides agreed to intensify efforts for an early, mutually beneficial agreement.

KPR Mills, Welspun Living, Arvind, Gokaldas Exports, Kitex Garments, among others gained between 2% and 5%. 

The textile sector has been significantly impacted by increased tariffs. Companies like KPR, Welspun, and Indo Count, which generate 50% to 70% of their revenue from this region, were among the hardest hit in the aftermath of steep tariff hike to 50%.

Textile Rally Premature?

SEBI-registered analyst Front Wave Research highlighted the need to look at the broader picture rather than just the immediate market reaction.

For Gokaldas Exports, they noted that the stock was consolidating between ₹1,060 to ₹680 over the past two years. A weekly close above ₹825 would signal bottom formation along with a potential daily trend reversal. 

Pearl Global has shown the strongest technical setup among its peers, having bottomed around ₹1,200, now building positive momentum.

Arvind has been in a sideways range of ₹400–₹300 for a year. Its indicators remain negative, and a decisive close above ₹385 would be required to suggest any shift in trend.

On the fundamental front, they said that the textiles sector is trading below 15x EV/EBITDA on a trailing twelve-month basis. While one-year sales growth has been encouraging, longer-term revenue trends remain muted. And just as signs of recovery began to emerge, tariff-related challenges introduced fresh uncertainty. Going ahead, FrontWave believes that favorable rulings and government incentives will serve as catalysts for re-rating potential.

They concluded that both technicals and fundamentals call for patience on textiles sector overall. A stronger confirmation is required before positioning aggressively. For now, the stance remains on the sidelines, closely tracking policy developments and potential momentum triggers.

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