Shares of defence companies, state-run as well as private, continued their upward journey on the bourses, with the Nifty India Defence index surging over 5 per cent on healthy outlook. In the past one month, defence stocks have rallied up to 54 per cent, as against a 7-per cent rise in Nifty 50.
Nifty India Defence index, the top gainer among sectoral indices, rallied 5.5 per cent to hit a high of 8,308.15 on the National Stock Exchange (NSE) in Friday’s intraday trade. In comparison, the Nifty 50 index was down 0.34 per cent at 24,976 at 11:55 AM.
The Nifty India Defence index was trading higher for the sixth straight day, surging 18 per cent, as against 3 per cent rise in the benchmark index during the period. The index quoted at its highest level since July 15, 2024. It had hit a record high of 8,302.05 on July 11, 2024, NSE data shows.
Cochin Shipyard, Garden Reach Shipbuilders & Engineers (GRSE), Mazagon Dock Shipbuilders (MDL), Data Patterns (India), Paras Defence and Space Technologies, Zen Technologies, Bharat Dynamics (BDL), Hindustan Aeronautics (HAL) and MTAR Technologies from the Nifty India Defence index rallied between 3 per cent and 12 per cent.
Bharat Electronics, BDL, MDL, Paras Defence and Solar Industries hit their respective all-time highs on the NSE in an otherwise subdued market.
What’s driving the rally in defence stocks?
The country is witnessing rapid import substitution, increased domestic production, and growing exports, leading to an inflow of higher indigenous orders to defence public sector undertakings (PSUs).
Defence industry is advancing steadily towards self-reliance driven by government policies, the Defence Research and Development Organisation (DRDO) innovations and global collaborations. The country is witnessing a rapid import substitution, increased domestic production and growing exports. This push towards indigenization is expected to boost the earnings of both public and private defence companies as many defense public sector undertakings (PSUs) are witnessing good order inflows with higher indigenous percentages, Astra Microwave Products said.
With India achieving all its vowed strategic objectives, Operation Sindoor was an unqualified and unequivocal success; a success in which India’s growing technological self-reliance played a pivotal role. The war unmistakably demonstrated the massive might of the Indian military powered by home-grown weapons and cutting-edge domestic technologies.
Propelled by a distinct showcasing of India’s indigenous military strength and effective deployment of indigenous systems, India’s defence stocks, viz. Cochin Shipyard, Paras Defence, Mazagon Dock Shipbuilders, Bharat Dynamics, Bharat Electronics and Hindustan Aeronautics rose steeply post Operation Sindoor.
“Stock market forecast is always fraught with uncertainties because of a slew of global cues and domestic factors, performance of the firm, industry and the macroeconomy and future prospects. To my mind, the defence stocks are fairly valued because the capability and competence of the Indian defence products are clearly established and, therefore, defence stocks are set to move higher and onwards in “the new normal”- a normal, where patience cannot be mistaken for weakness, retribution and catastrophic revenge are inevitable in India’s new war doctrine at a date, time and place of India’s choosing,” said Dr. Manoranjan Sharma, Chief Economist, Infomerics Valuation and Ratings Ltd.
India’s major defence stocks, viz. Cochin Shipyard, Paras Defence, Mazagon Dock Shipbuilders, Bharat Dynamics, Bharat Electronics and Hindustan Aeronautics are likely to do well. But the rise in these stocks will be a function of various factors. Hence, it’s difficult to quantify the rise in these scrips, said Dr. Manoranjan Sharma.
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