As we know Bangladesh is biggest exporter of Textile. So because of their political crisis there is high chance that international Buyers will look at Indian companies for their order fulfillment. Why are textile stocks rising?-Bangladesh Effect, this article explain about how Bangladesh political crisis is effecting upsurge on Indian textile stocks .
Why are textile stocks rising?-Bangladesh Effect
As per wikipedia “The textile and clothing industries provide a single source of growth in Bangladesh’s rapidly developing economy Exports of textiles and garment are the principal source of foreign exchange earnings. By 2002 exports of textiles, clothing, and Ready made garments (RMG) accounted for 77% of Bangladesh’s total merchandise exports.Emerging as the world’s second-largest exporter of ready-made garment (RMG) products, Bangladesh significantly bolstered employment within the manufacturing sector.
In 2019, Bangladesh’s share of apparel exports to the USA was 7%, while China’s was 30%. By 2023, China’s share had dropped to 22%, and Bangladesh’s share had risen to 09%. Meanwhile, India has also benefited slightly, increasing its share from 5% in 2018 to 6% in 2023. Similarly, Bangladesh’s share of apparel imports into the EU rose to 21% in 2023, while India’s share remained at 5%.
Political Crisis of Bangladesh
Current situation in Bangladesh is not good as prime minister Shekih Hasina resigned as PM and left for India. People are against government because of reservation policy for their party benefit. People also have attacked prime minister house and Parliament house. Be cause of which PM resigned and landed in India and planning to go to UK.
Why are textile shares rising?
Because of above key factors , Indian Textile industry stocks are rallying today mostly because of thought process that buyers of Bangladesh market can look up to Indian market for the order fulfillment. As Indian text tile market is also getting support from government to fulfil bulk order capacity.
Stocks on upsurge
- Shares of Gokaldas Exports surged by 19% in intraday trading today, reaching ₹1,095.
- Other textile stocks, including KPR Mills also reached 15% upsurge.
- Vardhman Textiles, Welspun Living, S.P. Apparels, Nitin Spinners, Arvind, and Himatsingka Seide, also experienced rally ranging from 5% to 17%.
Please check fundaments and technical of any stocks before taking any decision. You can go through our article.
What should investor do now?
As per Business stand article “Leveraging the crisis in Bangladesh, textile and garment-related stocks surged up to 11 per cent on the National Stock Exchange (NSE) on Tuesday. Analysts, however, caution against chasing the rally as the move may provide only a “temporary window” for gains.
They, rather, suggest investors wait for the rally to cool off before adding fundamentally sound companies to their portfolio from a long-term perspective.
As per HDFC securities Deepak Jasani “The ongoing crisis in Bangladesh means fresh order flow may get diverted to India till the situation stabilises. This, however, is a temporary window as Bangladesh remains advantageous on the cost front. If the stocks continue to rise sharply, market participants need to think even before taking a trading bet,”
Conclusion
Current situation in Bangladesh is critical now and we hope it returns to normal. Indian Stocks are rallying now as expert opinion better not to take entry now at the top and get stuck, instead try to see the situation and take your step.
Note: We are not SEBI registered advisory, so kindly check with financial advisor before taking any step.
Frequently Asked Questions:
1.Why are textile industry stocks rising?
This is due to current political condition in Bangladesh which is largest exporter of textile.Because of which Indian textile stocks are rising.
2.Who is the No 1 textile company in India?
As per research its Arvind Ltd.
3.How big is the textile industry in Bangladesh?
The Bangladesh Textile Manufacturing Market size is estimated at USD 19.04 billion in 2024, and is expected to reach USD 25.25 billion by 2029,