Indian Textile Stocks Soar On Hopes To Benefit From Bangladesh Crisis
The current headwind for the country provides a potential opportunity for Indian players to increase their market share.
Listed textile companies in India benefited in trade on Tuesday as a crisis in Bangladesh brought in hopes that this would provide an opportunity for domestic players to up their game.
The South Asian neighbour was crushed by a crisis that led Prime Minister Sheikh Hasina to flee, after which Army chief Waker-Uz-Zaman said a new interim government would be formed with the participation of all parties.
Hasina resigned and left the country on Monday after fierce clashes in Dhaka left over 100 dead and plunged the country into chaos.
Textile exporters such as Gokaldas Exports Ltd., Vardhman Textiles Ltd., Welspun Living Ltd., KPR Mill Ltd., and Arvind Ltd. saw their scrip skyrocket on Wednesday.
Shares of Gokaldas Exports rose as much as 18.7% during the session, while KPR Mill climbed nearly 17%.
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Bangladesh has experienced steady growth in its textile exports, propelling it to become the world's second-largest exporter, closely following China's lead, according to Bloomberg data. The current headwind for the country provides a potential opportunity for Indian players to increase their market share.
"A one-day crisis in Bangladesh does not mean that entire exports shift to India," according to Aditya Agarwala, co-founder and director of Invest4edu. "But this is how the market reacts these days."
Most have given up gains and one should not pay much heed to this sudden news, Agarwala said. "Once the dust settles down, these stocks will come down to the corrective levels."
