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Defence stocks HAL, BDL, BEL gain up to 3% in weak market; here's why
Shares of defence companies were trading higher by up to 3 per cent on the National Stock Exchange (NSE) in Friday's intra-day trade in an otherwise weak market amid escalating Israel-Iran tensions.
Hindustan Aeronautics (HAL), Bharat Dynamics (BDL), Bharat Electronics (BEL), Astra Microwave Products, Zen Technologies, Paras Defence and Space Technologies, Unimech Aerospace and Manufacturing and DCX Systems from the Nifty India Defence index up gained in the range of 1 per cent to 3 per cent.
At 09:30 AM; Nifty India Defence index, the sole gainer among sectoral indices, was up 0.6 per cent, as against a 1.1 per cent decline in the Nifty 50.
What's driving defence stocks today?
In the early hours of Friday, Israel targeted Iran's capital, Tehran, by launching a 'preemptive strike', Defence Minister Israel Katz announced. Explosions were heard across Tehran on Friday morning.
Israel's Prime Minister Benjamin Netanyahu, in a video message, said, 'Moments ago, Israel launched Operation Rising Lion, a targeted military operation to roll back the Iranian threat to Israel's very survival. This operation will continue for as many days as it takes to remove this threat.'
Defence sector outlook
Defence Secretary Rajesh Kumar Singh on Wednesday has said that contracts worth around ₹2 trillion are expected to be signed in FY26, aiming to match FY25's record contract value of ₹2.09 trillion. Of the 193 contracts signed in FY25, 92 per cent were awarded to Indian firms, reaffirming self-reliance and its preference for domestic manufacturing. Singh emphasized that imports should be rare, with technology transfer and Indian production being the norm - even for foreign OEMs seeking Indian contracts.
Meanwhile, according to media reports, the Indian Army is set to receive a significant boost with the Defence Ministry expected to soon clear a ₹30,000 crore proposal for the acquisition of three regiments of the indigenous Quick Reaction Surface-to-Air Missile (QRSAM) system. The Defence Acquisition Council is expected to take up the proposal by late June.
Developed by BDL and BEL in accordance with the Defence Research and Development Organisation (DRDO), the Quick Reaction Surface-to-Air Missile (QRSAM) is a highly mobile air defence system capable of tracking and engaging targets while on the move or during short halts. With a range of approximately 30 km, it will complement existing systems like Akash and Medium Range Surface to Air Missile (MRSAM) for short to medium-range threats.
Defence companies continued to benefit from the government's push on the indigenization while the geopolitical events during the quarter led to Emergency Procurement from government which will lead to additional orders for the defence companies.
In terms of aggregate order backlog of PSUs, ₹3.6 trillion crore worth of contracts are in place (4.5x FY25 revenues), giving healthy growth visibility. The order outlook here onwards remains strong as ICICI Securities believe the sector is expected to thrive in the coming years due to faster acquisition processes, greater indigenization, and advanced indigenous systems.
Defense exports hit a record ₹23,600 crore in FY25, with strong traction in Europe amid rising budgets. Indian firms are scaling in next-gen domains like AI, drones, & cyber defense, enhancing long-term growth visibility. Despite near-term execution risks, structural tailwinds-indigenization, policy push, & global demand remain intact.
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