Why Textile Stocks Like SP Apparels, Welspun Living, and Arvind Are Surging Despite India-Pakistan Tensions

SP Apparels, Welspun Living to Arvind: Why Textile Stocks Surge up to 20% Despite India-Pakistan

Tensions — Explained

Introduction: A Rally Against the Tide

While geopolitical tensions often send stock markets into cautious territory, a different narrative is playing out in India’s textile sector. Stocks like SP Apparels, Welspun Living, and Arvind have rallied up to 20% in just a few trading sessions, defying conventional market logic. Amid heightened tensions between India and Pakistan, particularly around trade and border issues, investors are doubling down on textile counters. So, what’s fueling this bullish sentiment? Let’s break down the multi-layered story behind this surprising market move.

Section 1: Performance Snapshot — Who’s Surging and by How Much

Top Gainers in Focus

• SP Apparels: Up nearly 19.6% in the past five sessions, supported by strong Q4 guidance and export orders from European brands.

• Welspun Living: Surged 17.3%, riding on bullish analyst calls and order book visibility from the US and Middle East.

• Arvind Ltd: Clocked a solid 14.8% jump, buoyed by management commentary on higher margins and reduced inventory pressure.

These gains are notable because they come amid an otherwise cautious market, where defense, FMCG, and pharma stocks are showing typical safe-haven behavior.

Section 2: Decoding the Bullish Sentiment

1. Surge in Export Demand

Despite border tensions, Indian textile exporters are witnessing robust international demand. The US, EU, and Middle East buyers are increasingly placing bulk orders with Indian manufacturers. Several reasons are driving this:

• China+1 Strategy: Western brands are diversifying away from China, turning to India as a reliable alternative.

• Bangladesh Political Unrest: Key competitors like Bangladesh are facing political disruptions, pushing orders toward India.

• Improved Logistics: India’s port and logistics infrastructure has improved significantly in the last year, easing exports.

2. Cotton Prices Have Stabilized

Cotton is a primary raw material for many textile players. After a period of volatility, cotton prices have stabilized both globally and in the domestic market. This has helped in:

• Improving margins

• Planning inventory stocking

• Securing long-term contracts at stable input costs

3. Government Support and PLI Push

The Production Linked Incentive (PLI) scheme for textiles is acting as a major catalyst. The scheme incentivizes high-value apparel and MMF (Man-Made Fibre) production, which aligns with the product portfolio of firms like SP Apparels and Arvind.

• Capital expenditure under the PLI is creating long-term confidence.

• Simplified export compliance and subsidies are also improving competitiveness.

Section 3: Geopolitical Tensions? No Real Threat to Exports

Why India-Pakistan Tensions Aren’t Spooking Textile Stocks

Geopolitical tensions between India and Pakistan have often impacted sectors like oil, defense, and financial services, but the textile industry has shown resilience. Here’s why:

• Limited Direct Trade: India’s textile exports to Pakistan are negligible. The reverse is also true.

• Focus on Western Buyers: The export narrative is heavily centered around Europe, the US, and Gulf nations.

• Strong Hedging Strategies: Many companies have already hedged their forex and supply chain exposure.

Market participants believe that unless full-blown conflict breaks out (which is unlikely), the impact on textile exports remains minimal.

Section 4: Institutional Buying and Analyst Ratings

Brokerage Firms Turn Bullish

Brokerages such as Motilal Oswal, ICICI Securities, and JM Financial have released positive coverage reports on textile stocks. Key highlights:

• SP Apparels: Target upgraded by 25% with “Buy” rating, citing export pipeline visibility and margin improvements.

• Welspun Living: “Outperform” recommendation as home textiles show a demand resurgence.

• Arvind Ltd: Analysts expect a turnaround in denim exports and a margin uptick due to product mix optimization.

FIIs and DIIs Accumulating

Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) are showing renewed interest in textile counters after several quarters of underperformance. This is visible in:

• Increased bulk deals

• Rising promoter holdings

• Higher open interest in textile futures

Section 5: Company-Specific Drivers

SP Apparels — Riding the Kidswear Export Boom

SP Apparels specializes in kidswear exports, a niche that is witnessing exponential growth in the EU and UK markets.

• Recently bagged multi-million-dollar contracts from British retail chains.

• New manufacturing unit in Tamil Nadu to be operational by Q2 FY26.

Welspun Living — Home Textiles Resurgence

Post-COVID, the demand for home improvement products has remained resilient. Welspun’s innovative product line, especially eco-friendly towels and bedsheets, is driving demand in the US.

• Strategic tie-up with US retail giants like Walmart and Target.

• Increased EBITDA guidance for FY25.

Arvind Ltd — Denims & Digital Expansion

Arvind is not just about textiles anymore — it's making inroads into digitally-integrated supply chains and fashion tech.

• New denim lines launched for EU markets.

• Adoption of AI-driven supply chain management is improving efficiency.

Section 6: Global Trends Favoring Indian Textiles

Shift in Global Supply Chains

India is benefiting from a major global supply chain reset:

• Rising labor costs in China

• ESG non-compliance in some ASEAN nations

• Demand for sustainable fashion

India’s positioning as a compliant, cost-effective, and ESG-aware sourcing hub is drawing investor confidence.

Free Trade Agreements (FTAs)

Recent FTAs with UAE, Australia, and negotiations with the UK and EU are expected to open zero-duty access to large textile-importing nations, boosting volume and profitability.

Section 7: Technical View & Market Sentiment

BSE Textile Index Performance

The BSE Textile Index has outperformed broader indices like the Sensex and Nifty in the last 1 month.

• RSI indicators suggest strength but not yet overbought.

• Heavy volumes indicate participation from large investors.

Short-Term Outlook

Expect continued momentum with:

• Minor profit booking around resistance levels.

• Support levels holding firm due to institutional interest.

Strategic Re-Rating in Progress

The rally in SP Apparels, Welspun Living, and Arvind isn’t just a knee-jerk reaction — it represents a strategic re-rating of India’s textile sector. While geopolitical headlines may grab attention, the core fundamentals are what’s driving investor conviction. Global tailwinds, margin improvement, government incentives, and rising demand form a solid foundation.

In a world seeking alternatives to China, India’s textile sector is stepping into the spotlight — and this time, it looks like it’s here to stay.