Trident to Welspun Living: Textile stocks advance on Trump's 15% tariff

Indian textile stocks rallied on Monday as the US President imposed a tariff of 15 per cent after the US Supreme Court struck down broad "reciprocal" tariffs imposed earlier by Donald Trump. 

 

Shares of Trident surged as much as 7.6 per cent, while Welspun Living gained 4.2 per cent and Alok Industries rose 4.1 per cent. Arvind was also up 3.5 per cent. So far this year, Welspun Living is up 7.7 per cent, while Trident and Alok Industries are down 0.6 per cent and 8.3 per cent, respectively.

 

The US Supreme Court struck down broad reciprocal tariffs imposed earlier by US President Donald Trump. Meanwhile, Trump imposed a fresh 15 per cent global tariff on imports from all countries and has effectively reset the interim US-India trade arrangement.

 

 

An earlier trade agreement between India and the US lowered the reciprocal duties to 18 per cent from 25 per cent, after the US withdrew a separate punitive tariff of 25 per cent. The agreement with the US came more than five months after Washington imposed 50 per cent tariffs on several Indian exports, including a 25 per cent punitive duty for India’s purchase of Russian crude oil.

 

Analysts at JM Financial said India could gain export opportunities from lower US tariffs, particularly in sectors such as auto components, electronics, textiles and pharmaceuticals. A reduction in tariffs from 18 per cent to 15 per cent is expected to improve pricing competitiveness for Indian exporters in the US market.

 

The brokerage added that the move could lend support to ongoing India-US trade discussions and strengthen India’s position in global supply chains, especially as US companies continue to diversify sourcing beyond China.

 

The current development on the tariff front is a welcome move, analysts said, adding that India has already delayed the visit of its trade negotiating team to the US in light of the changed scenario. "From the market perspective, the US SC decision is indeed positive, but this is not sufficient to trigger a sustained rally in the market. The market will see only a relief rally, which is unlikely to sustain," VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said.

 

Last month, textile companies' stocks rallied after Finance Minister Nirmala Sitharaman, in the Union Budget, said that the government proposes to set up mega textile parks to focus on value addition in technical textiles. Further, India and the European Union (EU) signed a free trade agreement (FTA), after negotiation which lasted for more than a decade.

 

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